Latest / Trend Watch / Episode 45: Class Warfare, Birthright Citizenship, and Syria's Future

Transcript

Episode 45: Class Warfare, Birthright Citizenship, and Syria's Future · Trend Watch

• 0:04
  SPEAKER_01: Ready to take a deeper look at where history, politics, and economics all intersect?
• 0:10
  SPEAKER_01: Well, then you've come to the right place.
• 0:13
  SPEAKER_01: Each week,
• 0:14
  SPEAKER_01: here's where we pull back the headlines and focus on the big trends,
• 0:18
  SPEAKER_01: the stuff that actually shapes our future.
• 0:21
  SPEAKER_01: Through the noise, we focus on the signal.
• 0:24
  SPEAKER_01: I'm your host, Neil Howe, and this is Trend Watch.
• 0:30
  SPEAKER_01: Today is December 12th, 2024, and this is Trend Watch.
• 0:35
  SPEAKER_01: Welcome back, everybody.
• 0:37
  SPEAKER_01: As usual, I have on my fellow analyst, Christian Ford.
• 0:41
  SPEAKER_01: So, Christian, you hate it when I ask you this, but how was your week?
• 0:44
  SPEAKER_01: I did.
• 0:46
  SPEAKER_00: It's been pretty good, Neil.
• 0:47
  SPEAKER_00: You know,
• 0:48
  SPEAKER_00: I will say it's been a pretty kind of dreary,
• 0:50
  SPEAKER_00: cold,
• 0:52
  SPEAKER_00: windy December here in D.C.,
• 0:54
  SPEAKER_00: but I imagine it's probably a little colder up there in West Virginia.
• 0:58
  SPEAKER_01: Oh, it's a lot colder, you know, and so it's both altitude and being away from the coast.
• 1:04
  SPEAKER_01: We have to worry about the animals out here,
• 1:07
  SPEAKER_01: you know,
• 1:08
  SPEAKER_01: dogs,
• 1:09
  SPEAKER_01: chickens,
• 1:09
  SPEAKER_01: goats,
• 1:10
  SPEAKER_01: you know,
• 1:10
  SPEAKER_01: they need bedding to stay warm.
• 1:14
  SPEAKER_01: I hate the idea of sleeping out there.
• 1:16
  SPEAKER_01: And the water, it freezes in the winter, you know that?
• 1:20
  SPEAKER_01: Yeah.
• 1:22
  SPEAKER_01: They can't drink from a frozen canister,
• 1:29
  SPEAKER_01: so we need to actually put heaters in the water to keep it liquid.
• 1:36
  SPEAKER_01: Yeah, kind of hard to drink frozen water.
• 1:40
  SPEAKER_01: anyway that's what we're doing it is getting colder it's definitely getting into
• 1:44
  SPEAKER_01: winter um but you know we're rugged uh so we will we will prevail right um as
• 1:52
  SPEAKER_01: always uh let me remind you if you like this podcast please go ahead share it with
• 1:57
  SPEAKER_01: your friends and family repost it on social media uh occasional episodes will
• 2:02
  SPEAKER_01: remain free um
• 2:05
  SPEAKER_01: And so, Christian, I think we should get right into today's podcast.
• 2:12
  SPEAKER_01: As always, we have a lot to talk about.
• 2:15
  SPEAKER_01: We'll get back to market news,
• 2:16
  SPEAKER_01: but maybe first off,
• 2:19
  SPEAKER_01: let me just cover some of the headlines,
• 2:21
  SPEAKER_01: which we'll be talking about.
• 2:23
  SPEAKER_01: First, around America.
• 2:27
  SPEAKER_01: Big news,
• 2:28
  SPEAKER_01: Luigi Mangione,
• 2:29
  SPEAKER_01: the suspected killer of the UnitedHealthcare CEO Brian Thompson,
• 2:34
  SPEAKER_01: was arrested at a McDonald's in Altoona,
• 2:37
  SPEAKER_01: Pennsylvania,
• 2:38
  SPEAKER_01: and awaits extradition to New York.
• 2:42
  SPEAKER_01: FBI Director Chris Wray announced that he will resign when President Biden vacates
• 2:47
  SPEAKER_01: the White House,
• 2:48
  SPEAKER_01: opening up the position for Trump's favored replacement,
• 2:53
  SPEAKER_01: which is currently Kash Patel.
• 2:56
  SPEAKER_01: In an NBC Meet the Press interview,
• 2:59
  SPEAKER_01: President-elect Trump announced that he would like to move immediately to end a
• 3:05
  SPEAKER_01: birthright citizenship through an executive order.
• 3:10
  SPEAKER_01: What an interesting idea.
• 3:13
  SPEAKER_01: We'll talk about that.
• 3:14
  SPEAKER_01: And globally,
• 3:16
  SPEAKER_01: on Sunday,
• 3:17
  SPEAKER_01: the Syrian rebel army HTS liberated Damascus,
• 3:20
  SPEAKER_01: which toppled the brutal 53-year rule of the Assad family,
• 3:26
  SPEAKER_01: triggering popular celebrations while also opening up Syria to a multi-sided power
• 3:32
  SPEAKER_01: struggle among new contenders for,
• 3:35
  SPEAKER_01: I don't know,
• 3:37
  SPEAKER_01: governing the nation.
• 3:39
  SPEAKER_01: In South Korea,
• 3:40
  SPEAKER_01: President Yoon Suk-yul refuses to step down while his political opponents charge
• 3:46
  SPEAKER_01: him with treason.
• 3:48
  SPEAKER_01: That's right, treason.
• 3:50
  SPEAKER_01: In the nation of Georgia,
• 3:52
  SPEAKER_01: the decision of the pro-Russian prime minister to postpone entry into the European
• 3:57
  SPEAKER_01: Union is triggering widespread popular demonstrations.
• 4:02
  SPEAKER_01: And finally,
• 4:03
  SPEAKER_01: in Romania,
• 4:05
  SPEAKER_01: that country's constitutional court has nullified the results of the first round of
• 4:11
  SPEAKER_01: the nation's presidential election.
• 4:14
  SPEAKER_01: amid charges by political moderates and by EU leaders of flagrant Russian interference.
• 4:21
  SPEAKER_01: Well, that's a lot on our plate.
• 4:24
  SPEAKER_01: So I'm going to turn it back to you, Christian.
• 4:27
  SPEAKER_01: You can take us through the markets, and then we can get into it.
• 4:30
  SPEAKER_00: All right, Neil.
• 4:31
  SPEAKER_00: Today, the S&P 500 closed down 0.54%, and over the last five days is down 0.39%.
• 4:40
  SPEAKER_00: As for the Global Dow, we have a similar story.
• 4:42
  SPEAKER_00: It was down today 0.29%, and over the last five days it's down 0.84%.
• 4:47
  SPEAKER_00: As for the VIX, that closed at 13.92%.
• 4:50
  SPEAKER_00: It's been around that level for the last week or so.
• 4:54
  SPEAKER_00: And as for the 10-year Treasury, that is at 4.34%, up 16.6 basis points over the last five days.
• 5:02
  SPEAKER_01: Yeah, definitely been going up a little bit lately, right?
• 5:05
  SPEAKER_01: So maybe that got to the S&P 500.
• 5:12
  SPEAKER_01: So what else is going on?
• 5:13
  SPEAKER_00: We have indicators from the U.S.
• 5:15
  SPEAKER_00: We got the non-farm payrolls for November.
• 5:18
  SPEAKER_00: They came in at $227,000, which was above expectations.
• 5:23
  SPEAKER_00: We also got preliminary Michigan consumer sentiment for December, which rose from 71.8 to 74.0.
• 5:31
  SPEAKER_00: We also got the small business optimism, which had a large rise from 93.7 to 101.7 in November.
• 5:36
  SPEAKER_00: That's the highest reading we have seen since June 2021.
• 5:43
  SPEAKER_00: Then we also got the inflation rate,
• 5:45
  SPEAKER_00: which ticked up slightly to 2.7% year over year in November,
• 5:50
  SPEAKER_00: while core inflation was steady at 3.3% year over year.
• 5:52
  SPEAKER_00: Yeah, yeah.
• 5:53
  SPEAKER_00: Well...
• 5:58
  SPEAKER_01: You know, the NFIB is basically the Trump approval index.
• 6:05
  SPEAKER_01: Well, small business owners lean hugely toward Donald Trump.
• 6:10
  SPEAKER_01: And if you just look at it,
• 6:12
  SPEAKER_01: whenever he's president or just after he's been elected,
• 6:16
  SPEAKER_01: right,
• 6:16
  SPEAKER_01: you just get this huge spike.
• 6:19
  SPEAKER_01: Before anything else comes in.
• 6:21
  SPEAKER_01: Right.
• 6:22
  SPEAKER_01: So that's to be expected.
• 6:26
  SPEAKER_01: So I guess that's it.
• 6:28
  SPEAKER_01: So we had we had employment.
• 6:31
  SPEAKER_01: We had consumer prices.
• 6:34
  SPEAKER_01: We had consumer confidence.
• 6:35
  SPEAKER_01: Look.
• 6:37
  SPEAKER_01: I take a little less rosy look at some of these numbers.
• 6:43
  SPEAKER_01: Take the CPI, for example.
• 6:45
  SPEAKER_01: Everyone said, well, this makes it okay now for Jerome Prowl to go ahead with his cuts.
• 6:52
  SPEAKER_01: One thing that impresses me when I look at the actual month over month annualized
• 6:58
  SPEAKER_01: growth rate of both the consumer price index for all items and for core items,
• 7:04
  SPEAKER_01: less food and energy,
• 7:06
  SPEAKER_01: They're both running now for about the past four months at around 3.7 or 3.8% annually, right?
• 7:15
  SPEAKER_01: You don't notice that because when you do the annual averages,
• 7:18
  SPEAKER_01: you average in those earlier months when it was slower.
• 7:23
  SPEAKER_01: But I think right now we're really seeing kind of an inflection change.
• 7:26
  SPEAKER_01: It really is month over month advancing in a fairly big clip.
• 7:31
  SPEAKER_01: And I would say if it doesn't go down month over month,
• 7:35
  SPEAKER_01: In the near near future,
• 7:39
  SPEAKER_01: Jerome Powell is going to be very hesitant to keep cutting the funds rate at the
• 7:46
  SPEAKER_01: same at the same clip that he's been doing.
• 7:49
  SPEAKER_01: You know, as for the as for the NFP number.
• 7:55
  SPEAKER_01: As those who have watched in the past are all about the indicators will know that
• 8:01
  SPEAKER_01: there's a huge gap between the CPS numbers and the NFP.
• 8:06
  SPEAKER_01: Now,
• 8:06
  SPEAKER_01: in any given month,
• 8:08
  SPEAKER_01: the CPS,
• 8:09
  SPEAKER_01: this is basically the current population survey done by the census,
• 8:13
  SPEAKER_01: is,
• 8:15
  SPEAKER_01: you know,
• 8:15
  SPEAKER_01: has a lot of variance to it.
• 8:17
  SPEAKER_01: It's sort of up and down.
• 8:18
  SPEAKER_01: It kind of jumps around.
• 8:19
  SPEAKER_01: But it's without bias.
• 8:21
  SPEAKER_01: So the NFP number, although it doesn't jump around as much, is with bias.
• 8:26
  SPEAKER_01: It tends to overestimate job growth early in the business cycle and,
• 8:31
  SPEAKER_01: excuse me,
• 8:31
  SPEAKER_01: underestimate it early in the business cycle because of its,
• 8:35
  SPEAKER_01: you know,
• 8:35
  SPEAKER_01: firm birth death model and overestimate it late in the cycle.
• 8:39
  SPEAKER_01: And one thing we have seen recently is an enormous gap.
• 8:44
  SPEAKER_01: between the year-over-year growth rate in the payroll,
• 8:50
  SPEAKER_01: the number of payroll jobs,
• 8:53
  SPEAKER_01: and the year-over-year growth rate in the number of,
• 8:57
  SPEAKER_01: in the employment as measured by the household survey,
• 9:00
  SPEAKER_01: where they just call up households,
• 9:01
  SPEAKER_01: right?
• 9:03
  SPEAKER_01: In the NFP number, the growth rate year-over-year is positive 1.44%.
• 9:07
  SPEAKER_01: That sounds pretty healthy.
• 9:12
  SPEAKER_01: But the current population survey, we're now at negative 0.45%.
• 9:19
  SPEAKER_01: And I'll tell you something,
• 9:20
  SPEAKER_01: looking back over the decades,
• 9:23
  SPEAKER_01: I have never seen a year-over-year negative CPS number outside a recession or just
• 9:31
  SPEAKER_01: after a recession,
• 9:32
  SPEAKER_01: you know,
• 9:33
  SPEAKER_01: when employment looks really terrible.
• 9:37
  SPEAKER_01: Until I go all the way back to, how far do I have to go back?
• 9:41
  SPEAKER_01: I think I have to go back to the mid-1950s.
• 9:46
  SPEAKER_01: So this is really interesting.
• 9:47
  SPEAKER_01: I've never seen such a long, prolonged gap opening up between these two measures.
• 9:55
  SPEAKER_01: That is to say, the household survey and the payroll survey.
• 10:01
  SPEAKER_01: One of the others is wrong.
• 10:03
  SPEAKER_01: And experience suggests that,
• 10:07
  SPEAKER_01: again,
• 10:07
  SPEAKER_01: late in the cycle,
• 10:08
  SPEAKER_01: it's usually the NFP number that's a little bit high.
• 10:12
  SPEAKER_01: But, you know, we're going to see.
• 10:14
  SPEAKER_01: Right.
• 10:15
  SPEAKER_01: So that's kind of my observation on what we're seeing in economic indicators.
• 10:21
  SPEAKER_00: All right, Neil.
• 10:22
  SPEAKER_00: On Monday,
• 10:22
  SPEAKER_00: police arrested 26-year-old Luigi Mangione with the murder of UnitedHealthcare CEO
• 10:29
  SPEAKER_00: Brian Thompson.
• 10:30
  SPEAKER_00: You know, I think his background surprised a lot of people, Neil.
• 10:33
  SPEAKER_00: He was born from a prominent Maryland family,
• 10:36
  SPEAKER_00: was the valedictorian of a Baltimore prep school,
• 10:39
  SPEAKER_00: and went to UPenn.
• 10:41
  SPEAKER_00: Apparently he had been suffering from back pain and he had written a manifesto
• 10:45
  SPEAKER_00: calling out the corruption of healthcare companies.
• 10:48
  SPEAKER_00: Since this murder, social media has been rampant with criticism of the healthcare industry.
• 10:52
  SPEAKER_00: Neil, what do you make of this tragic event and how it reflects on the broader mood of the country?
• 11:00
  SPEAKER_01: Well, you know, it just shows America's contempt.
• 11:09
  SPEAKER_01: Maybe that's, is that too strong a word?
• 11:11
  SPEAKER_01: At least impatience with the,
• 11:15
  SPEAKER_01: with kind of core institutions in this country,
• 11:19
  SPEAKER_01: both political and economic,
• 11:22
  SPEAKER_01: and the elite who run that.
• 11:24
  SPEAKER_01: Right.
• 11:25
  SPEAKER_01: You know, we should have recognized that in the Trump election.
• 11:28
  SPEAKER_01: You know, that's what populism is all about.
• 11:32
  SPEAKER_01: But we talked about that a little bit last week, right?
• 11:36
  SPEAKER_01: Even before he was caught, the social media reaction, you know, lionizing this guy as a hero.
• 11:45
  SPEAKER_01: And I don't know if you noticed this, but in the last few days, there are CEO wanted posters going