Oh, look, more inflation from American public media. This is Marketplace. In Los Angeles, I'm Kyle Rizdahl. It is Wednesday. Today, this one is the 13th of May. Good as always to have you along, everybody. So you remember yesterday, the big inflation news, consumer prices rising 3.8 percent year on year. Oh, for the halcyon days of 24 hours ago, we learned this morning from the good people at the Bureau of Labor Statistics that producer prices, that is prices at the wholesale level, shot up 6 percent in April from a year ago. the March to April increase this year was 1.4 percent. We haven't seen numbers like that since 2022 during those post-pandemic inflation blues. It is not, to be clear, a one-for-one correlation wholesale prices trickling down to the consumer, but it is a real safe bet that higher prices at retail are coming our way. Marketplace's Kelly Wells gets us going. When Laura Veldkamp saw the numbers this morning, the word that came out of her mouth was wow. That's a large rise in prices. She's an economics and finance professor at Columbia University. The reason for the wow is these are price hikes that we as consumers haven't even seen yet. This is above and beyond what we've already felt at the gas pump or on the shelf of the store. The cause of that jump in prices? You get one guess. This seems directly related to the war in the Middle East, to the disruption in the fuel supply. Diesel's up 13 percent, gas is up 16 percent, and that's a problem. Some of these higher energy prices are starting to feed into, you know, other goods and services prices. Grace Zwemer with Oxford Economics says some of those other prices are obvious. Trucking, freight, passenger transportation, but energy spikes also sneak into grocery prices too. They're what drives a lot of farm equipment, but also commercial transportation equipment. Now, producers have already paid those prices. Gary Brode is managing partner of Deep Knowledge Investing, and he says even if the war ended tomorrow and energy prices fell, the producers still have to recoup their higher costs. If the input costs go up, that has to work its way through the system. So Broad says even though prices feel high now, it's a good time to stock up because they're only going to get worse. Go buy canned tuna fish, canned chickpeas, canned beans, stuff like that. So when your grocery bill for really good fresh food skyrockets, you can say, you know what, once or twice a week, we're going to eat out of the pantry. Laura Veldkamp with Columbia says consumers have about two to four months before the price spikes in today's PPI show up on the store shelves. I'm Kaylee Wells for Marketplace. This seems an opportune moment, speaking of inflation as we are, to let you know that Kevin Warsh was confirmed by the Senate today to succeed Jay Powell as chairman of the Board of Governors of the Federal Reserve. With the job, of course, comes the economic management, shall we say, challenges presented by today's inflation numbers. Wall Street today, honestly, traders seemed not phased even a tiny little bit by the prospect of rising prices or the war or anything, actually. One word, four syllables, the driver of so much in the markets of late technology. We will have the details when we do the numbers. We talk every now and then on this program about lagging versus leading indicators. Just like it sounds, lagging data tells us where the economy has been. This week's inflation data, for instance, lags. We know what inflation was in April, not what it's going to be. And while the bond market isn't technically a leading indicator, if you read the tea leaves closely enough, it can tell you where the economy might be headed. Case in point, the yield on the long bond today, the U.S. 30-year Treasury, closed above 5 percent. There is nothing magic about 5 percent per se, but that is higher than that yield has been in almost a year. And we care about the bond market because Treasury yields affect all kinds of consumer lending. But we also care because those rising yields can tell us a lot about what investors inspect in both the short term and the long. Marketplace's Justin Ho has more on the signals bonds are sending right now. Between the hot CPI and PPI reports this week, bond investors have had plenty of reasons to believe that inflation is getting uncomfortably high. What we've seen is investors pricing in higher long-term inflation into what they want to receive from lending to the government. That's Luke Tilley, chief economist at Wilmington Trust. He says investors expected inflation data to pick up this week, since energy prices have been rising ever since the war in Iran started. But Tilley says the fact that inflation is rising in other categories, including trucking and transportation, is a big concern for the Federal Reserve, because as long as consumers are willing to pay these higher prices? Well, then you would not be really in the mood to be cutting interest rates. You would want to either hold them where they are or raise them to tamp down on spending, essentially. As a result, bond investors have been demanding higher yields. especially on short-term government bonds, which are more closely tied to what investors think the Fed's going to do. Matthew Miskin, with Manulife John Hancock Investments, says two-year Treasury yields have been picking up, for instance. That suggests over the next two years there will be a hike. But interest rate hikes have consequences. They slow down the economy. And Miskin says that is being reflected by long-term bond yields. In terms of the longer end, it's like, yeah, well, if the Fed then hikes or has to be more restrictive, then that's not great for longer term growth. Miskin says that's why yields on 10-year treasuries, for instance, haven't been rising as quickly as shorter term yields. In other words investors aren quite as worried about inflation over the long run as they are about inflation this year George Perk says macro strategist at Bespoke Investment Group An inflation shock today doesn really tell you anything about where inflation is going to be in the period starting 10 years from now or 20 years from now. But Perk says long-term bond yields aren't signaling doom either. That's because there are still plenty of factors that are boosting the economy, including consumer spending and business investment. What the bond market currently sees is a U.S. economy that is very resilient. And the resilient economy pushes yields higher, too. I'm Justin Ho for Marketplace. There are some pretty standard rites of passage of one's teenage years. There's the prom and graduation, a first real summer job. Here's another one. Your first dividend check. The Young Investors Society, that's a nonprofit focused on financial literacy and teaching investing skills, counts more than 5,500 students as participants, with more than 3,000 joining in just the past school year. Marketplace's Carla Javier talked to some would-be Warren Buffetts. When Jasper Gould of Brooklyn, New York, was in seventh grade, he started wondering what Wall Street was all about. So he Googled it, read some analysis in a book called The Intelligent Investor. Then he cobbled together a few thousand dollars, mostly from gifts, some work at home and a summer camp. And through a custodial investment account managed by his dad, bought some stocks. As someone who played video games, I understood what NVIDIA was at a very surface level. So that excited me. So did Intel, Microsoft and Amazon. I remember checking my portfolio about a year after probably eighth grade, and I think it was up 66 percent that year, which was, you know, pretty significantly strong. Now he's a junior in high school and co-founder of the Brooklyn Youth Charitable Investment Group, where more than 300 teens invest money from private donors and grants and donate returns. We can make an impact on the world and we can still do the thing that we're really interested in. As for his personal portfolio, he says by the time he's in his early 20s, it could potentially be a, quote, life-altering sum of money. It's very possible that, you know, the money I've made from profiting off of artificial intelligence and its advancement in the stock market could, in fact, bail me out from any career troubles down the line that result from artificial intelligence and its invention. Financial uncertainty is one reason why Jonathan Craig thinks teens are interested in the markets. He's head of retail investing at Charles Schwab. Full disclosure, a marketplace underwriter. This generation recognizes that they're growing up in an environment where homeownership is incredibly expensive, education is expensive. There's a little bit of job uncertainty. And I think there's a recognition that if financial independence is important, investing is going to have to be a big part of it. Charles Schwab recently announced investor accounts specifically for teens. Like a custodial account, these teen accounts still require a parent or guardian to get started. But instead of needing that adult to complete a trade, a teen can do it on their own, though there are some guardrails. They can't use leverage. No derivatives, no futures, no forex. And parents can see what their teens are up to. If they lose money, well, at least they learned something. These teen accounts aren't the only option. Greenlight, a money management and education app for kids, gives parents the option to approve proposed trades. Fidelity, another marketplace underwriter, also offers youth accounts for teen investors. And lots of institutions from Vanguard to Merrill offer more traditional custodial accounts. Carly Urban at Montana State University says it makes sense for companies to introduce their products to young potential customers and to get their parents signed up too. The Urban points out that not everyone will be able to take advantage. And it's probably going to be the parents with more resources and who trust financial systems, who probably are already investors, who are going to be all for this. Urban says it's difficult to know for sure how teens feel about the economy and how many are actually investing. There just aren't that many big, consistent surveys focused on minors. Though the SIFMA Foundation, which runs a high school competition called the Stock Market Game, says participation is up more than 35 percent over the last decade. So there are a lot of different ways that we're seeing kids be involved. When Elisa Chang's dad would bring up stocks and investing at dinner, the senior at Valencia High in Placentia, California, didn't quite know what he was talking about. So she set out to learn, even going to an investing boot camp. Soon she was researching stocks herself and worked with her dad to buy some stock in fintech company Futu Holdings. She had some Starbucks in her portfolio too. She likes the drinks. She says she's seen pretty good growth. I started off with a lack of confidence at first, and I feel like I will resonate with a lot of people at my school, maybe especially the girls, who we don't talk about this at all. She started a local chapter of the Young Investor Society with 20-some members. We tried to share as much knowledge into, you know, the basics and how you could start analyzing. And now she likes that she can keep bonding with her dad, discussing stocks at the dinner table. I'm Carla Javier from Marketplace. Without putting too fine a point on it, it is entirely possible the digital and on-demand economy has given we humble American consumers unrealistic expectations. Next day delivery? Same day delivery? Oh, please. 30-minute delivery? Now you're talking. Depending on where you live and depending on what it is that you want, Amazon says they can have it at your door in half an hour or less. Marketplace's Samantha Fields has today's installment of our Every Now and Then series, Things You Didn't Know You Needed, but that capitalism is giving you. Amazon now is not yet available where Brad Jashinsky lives in Southern California, but he can imagine himself using it. I have a five-month-old right now. If we run out of diapers or she needs cold medicine or something, yes, I could go drive to the store, but it's worth that few extra dollar fee. Jashinsky is a retail analyst at Gardner, and he says right now if he needs something fast he order it from Walmart and he able to get it if not quite in 30 minutes maybe within an hour or so For certain items consumers really value convenience and this now gives Amazon a way to compete Amazon has long been the company pushing delivery forward, he says. The Amazon brand is almost synonymous with convenience. Retail analyst Bruce Winder says consumers' expectations are constantly shifting. Convenience used to be a day or two, and then it was same day, and then it was a few hours, and now it's 30 minutes. But he says actually delivering things someone just ordered online in 30 minutes is difficult and complex. You need to have a combination of local infrastructure. You need to have algorithms and the right AI set up so you can anticipate what folks need before they even need it. You just need to be able to turn things incredibly quick. Most companies that have super fast delivery, including Amazon, only offer it on a small number of high demand products. But Mark Wolfrat at consulting company MWPVL International says it's still tough to make it work, logistically and financially. There was a bunch of companies like Bikes and Gorillas and these guys that promised 15 minute delivery in New York City with grocery merchandise and they all went belly up and failed. Because, he says, the cost structure was just too high. I'm Samantha Fields for Marketplace. Coming up. It's feeding some primal need. of having this like big monster truck. I mean, it does go food, shelter, big monster truck, right? First, though, let's do the numbers. Down Dustro's down 67 points today, a 10 percent, 49,693. The NASDAQ up 314 points. That is 1.2 percent, 26,402. S&P 500 added 43 points, six tenths percent, 74 and 44. Warmer weather means sandal season is coming if it isn't already upon us. And Birkenstock, maker of the somewhat controversial footwear, reported earnings today that missed expectations. The German company cited tariffs and currency swings as reasons why Birkenstock slumped 12 and nine tenths of one percent. Have you seen the sandals? Of course it slumped. And video shares jumped two and three tenths percent today on the news that CEO Jensen Huang has joined President Trump's delegation to China. Don't at me about the Birkenstock thing. Micron Technology and Qualcomm are on that trip too. Micron up 4 and 8 tenths percent. Qualcomm lifted 1 and 4 tenths percent. You're listening to Marketplace. This Marketplace podcast is supported by Intuit QuickBooks. If you're trying to grow your business, Intuit QuickBooks Workforce can help you lead your business with confidence, clarity, and in a way that makes sense for you. As a sponsor at Marketplace's My Economy, QuickBooks Workforce recognizes that no one person or business's finances are the same. As your needs evolve, QuickBooks Workforce evolves with you, bringing together the core HR capabilities businesses expect with the flexibility to adapt to your specific needs. QuickBooks Workforce combines human intelligence and AI-powered tools, so you get smart automation without ever losing control, spend less time reconciling, and more time deciding what to do next. Your processes get streamlined, and you get precious time and energy back to move forward proactively. Move from reactive to proactive with brand new tools by making the switch to QuickBooks Workforce today. Hear Marketplace's My Economy at marketplace.org slash myeconomy, and learn more about how QuickBooks can help your business grow at quickbooks.com slash workforce. That's quickbooks.com slash workforce. This is Marketplace. I'm Kyle Rizdahl. We're going to go energy heavy in this second half of the program, oil and its distillates. And we begin with the always good to remember truism that whatever American politicians like to say about U.S. crude supply, oil trades in a global market. And with supplies as scarce as they are now because of the war with Iran, the International Energy Agency says crude inventories are falling at a record pace. The agency, which coordinates International Reserve releases, says those global stockpiles are decreasing by about four million barrels a day. That drawdown is, yes, helping to keep a ceiling on prices for gas and jet fuel. Supply just about keeping up with demand for now. But as Marketplace's Elizabeth Troval points out, inventories do not last forever. The International Energy Agency was created to deal with exactly the kind of global energy supply shock we're dealing with right now. For 50 years, the U.S. and its allies have purchased and held inventories for a rainy day. That's Mark Finley with Rice University, who calls today's crisis... The rainiest of days in oil market history anyway. The ultimate nightmare scenario for energy security. And oil is the biggest source of fuel for the U.S. and for the global economy. While we did prepare for this rainy day, every day we're burning through more of those emergency stockpiles of oil and fuel. Gregory Brew is with Eurasia Group. That is a ticking clock. Eventually, inventories run down to the level where you can't keep drawing from them, and you either need to get supply back up and running, or you need to reduce demand. That comes in the form of even higher prices. A lot of analysts are pointing to June as the crucial pain point, and that is based on the current level of consumption remaining consistent or possibly even increasing since the summer tends to be the peak demand for the year. High summer demand at a time of historic supply shortfall, while reserves are being drained and there are no large-scale increases in oil production. Tom Tsang is with Texas Christian University. Every single day that this conflict continues with the strait closed, the situation's just getting worse and worse and worse. And even after we see resolution and a slow recuperation of oil markets. Then we have to add this new layer, and that is replenishing these reserves that we're drawing down because of the conflict. That's more oil demand. So he says, regardless of when this mess ends, pain at the pump is going to last at least for several more months. I Elizabeth Troval for Marketplace Elizabeth's story was the strategic side of oil and its distillates. We're going to go now to Wyoming for the more tactical side, and we're going to do it with a swing by the AAA website, which tells us that as of today, a gallon of diesel in Wyoming costs you $5.49 a gallon, a full dollar more than regular gas there. We have talked on the program before about how diesel prices are hitting long haul trucking and small businesses. Today, another group, people who drive big diesel pickups in there every day. In some Mountain West and Northern Plains states, one out of every three vehicles on the road is a pickup truck, double the national average. Marketplace's Caitlin Tan has this one. Chelsea Tatum fires up her massive Ford F-350 diesel truck, the kind that's got those dual wheels in the rear. She backs the massive truck out of her tiny driveway in Lander, Wyoming. Plopped on top is a live-in camper. Yeah, you can't see anything. definitely smacked a rock, a large boulder here or there. She uses the rig for road trips and driving rough terrain to her favorite hiking spots. But today is just show and tell. Tatum is no match for the F-350 size-wise. She leaps out a couple feet to the ground. She's wearing Lisa Frank croc shoes and bright red lipstick. I think it's nice as a woman to have something that's like big and like, I don't know, tough and loud. But that tough and loud feeling burns a hole in her jeans pocket. I only get 10 miles to the gallon with the camper on it. Lately, it's 200 bucks to fill up. So for Tatum to drive the truck instead of her car? It's a lot of math and being, OK, how much is it going to cost me to get there? It doesn't make sense. Right now, it doesn't. But that doesn't mean she's going to park it by the side of the road with a for sale sign. There's something about a big truck that makes a lot of noise that is, I don't know, it's feeding some primal need of having this like big monster truck. In Wyoming, diesel engines roar through neighborhoods. Big trucks sandwich small cars in parking lots. And if you don't own one, you know someone who does. My mother, who is 85 years old. She has this gigantic truck. Melody Edwards has lived in Wyoming for much of her life. I was like, Mom, would you like to sell that truck? I mean, it's just her. No, she must have a giant truck. Edwards is the host of the Modern West podcast, which explores the region's culture and way of life. And that includes diesels. There's a certain pride in that by a lot of people that they're driving a fossil fuel vehicle and they're loud. That's just how it is. It's just sort of like the soundtrack of the American West. And it's hard to get that song out of your head. It would be really hard to pry the truck out of people's iron grips. They're not going to give them up easily. In fact, diesel prices have been relatively high since the pandemic, and there's still plenty of Wyomingites driving big diesel trucks. Sometimes our snow will just drift all the way over the highway, and you need to just be able to get through a crazy snow drift. Or you need the big truck for taking care of your animals. I meet Marta Johan at her place outside of Lander. She's leading a frisky brown and white horse named Clementine. Look at this guy. My God. I really feel like a free spirit right now. Riding horses is the thing she loves to do. People even hire her to take their own horses out for training and exercise. We go not just out of here, we go, you know, two, three mountain ranges over to kind of get horses in new places and exposed. Johan pulls her horse trailer with a Ram 2500. You're not going to hear it today. It's at the shop. Coming back from our last trip of hauling, the clutch went out on it. Another expense on top of diesel prices, but she's certainly not selling it. You know, you just kind of get kind of sucked into that spot of being like, I guess I have to pay if I want to continue this lifestyle. Because there's just something about a big old diesel. In Lander, Wyoming, I'm Caitlin Tan for Marketplace. This final note on the way out, we're going to circle back to the Federal Reserve real quick. and the jam the central bank finds itself in with inflation doing what it is doing. Susan Collins, the president of the Federal Reserve Bank of Boston, said in some remarks today that she could see a situation where the central bank's next move is an interest rate hike, not a cut. I'll leave you to anticipate the reaction to that from the White House, but I will also add here that one of the things that soon-to-be Chair Kevin Warsh has said he wants to do is to cut down on public speeches and remarks by Fed officials. Our media production team includes Brian Allison, John Fokey, Montana Johnson, Drew Jostad, Gary O'Keefe, and Charlton Thorpe. Alex Simpson is the manager of media production. And I'm Kyle Rizdahl. We will see you tomorrow, everybody. This is APN. We help your little ones think big about important but tricky topics like taxes, gas prices, and even what a cashless society might be like. There's a bunch of new episodes out now, so go listen to Million Bazillion on your favorite podcast app.
