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On the program today, corporate fortunes the rest of the year,

small business fortunes the next five or ten years, some other stuff, too. From American public media, this is Marketplace. In Los Angeles, I'm Kyle Rizdahl. It is Tuesday, today, 7 July. Good as always to have you along, everybody. Fair is fair. One likes it to be in business and economic coverage. So just as we started yesterday with a decidedly consumer-oriented couple of minutes, so today we go corporate, because later this week, second quarter earnings season is going to be upon us, starting with PepsiCo on Thursday. Best guesses are they'll be okay, not spectacular. Taylor. Then Delta Airlines on Friday, which is expected to have beaten estimates in spite of the spike in jet fuel costs since President Trump started bombing Iran. Expensive seats being bought by premium travelers, if you're looking for a how'd they do that right there. The real rush then comes next week with a slew of big Wall Street banks. January through March, that is Q1, companies in the S&P 500 reported earnings up more than 28 percent year over year. That's going to need to fax it. So with firm reliance on the fact that while the stock market is not the economy, it is related. So what do you suppose is in store this time around? Marketplace's

Mitchell Hartman gets us going. It's not like the second quarter has been all smooth sailing for the U.S. economy or corporate America. Well, there's that old saying that the market likes to climb a wall of worry. Sam Stovall is chief investment strategist at CFRA Research.

despite trade issues, despite higher oil prices, and now the prospect that the Fed could be raising interest rates, earnings continue to surprise investors. We're going to get another 20 percent

plus earnings growth quarter. It's almost a certainty. Jeff Bookbinder tracks the markets at LPL Financial. It will be driven primarily by tech, particularly the semiconductors and memory names that have been such strong performers. That's the Magnificent Seven,

Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla, which Bookbinder predicts will be up

50 percent this year. But we also don't want to lose sight of the fact that the earnings environment is improving for the rest of the market. Non-tech earnings growth could be in

the high teens this quarter. Let's drill down on a few of those sectors. The big banks start reporting next week, and Sam Stovall says...

Banks are doing well with the prospect that maybe the Fed could be raising interest rates. The financials are actually picking up...

Because they can earn more on money they lend out to consumers and businesses. Energy companies had a boon with higher oil prices, and some consumer-facing brands also likely did well, says Boston College economist Brian Bethune.

Retail, leisure, and hospitality, in terms of the spending on the World Cup. Breverage companies like Coca-Cola, Pepsi.

This is first and foremost a big company rally, but it's not only them, says Bill Murs at U.S. Bank.

Growth expectations for the S&P are 24.5 or so percent, but we're seeing mid-cap earnings growth expectations for the full year up 19 percent, small cap up 22 percent. Murs says...

all the basics are in the mix now. Strong consumer spending, strong business spending, and companies investing heavily in automation and AI to drive higher productivity and more profits to the bottom line. I'm Mitchell Hartman for Marketplace. Two more market-related tidbits

before we move on. That last line Mitchell had there about companies investing heavily in AI, Amazon, one of said companies investing heavily in AI, has apparently decided it needs even more capital to invest even more heavily. The company announced a new bond offering today, $25 billion worth. Also, oil, both crude benchmarks up more than 5% a day after the Trump administration revoked the authorizations it had given Iran to sell its oil. Ceasefires, remember, aren't just about bombs and bullets, right? Wall Street on this Tuesday, remember how yesterday AI was good? Yeah, well, that was yesterday. Details, numbers, you know the drill. Samsung reported its second quarter profits today. Staggering would be a good word. an 1,800% profit increase year over year. That is not a typo. Sales more than doubled. Expectations were beaten, and yet its shares traded in Seoul closed down nearly 7%. Marketplace's Kelly Wells

explains what's going on there. Samsung's a giant company, partly because they make everything from TVs to dishwashers to headphones, but its recent meteoric rise is mostly thanks to one arm of its

business. The servers that power AI and the chips that power AI need substantial memory, and Samsung is the largest vendor of memory in the world. Matt Bryson directs hardware and

semiconductor research at Wedbush Securities. There's also a shortage of memory thanks to the rapid growth of AI, which means Samsung can sell it at a high price. Bryson says that is a perfect recipe for a successful quarter, which means expectations are really, really high. Funny thing is, those really, really high expectations are partly to blame for the dip in its stock price today, says economics professor Paul Shea of Bates College.

And in financial markets, what matters is not the news itself. It's the expectation of the news.

Companies want to beat expectations by a lot. Samsung only beat it by a little. Plus, since investors expected a good result this quarter, they bought the stock before the announcement today.

We think there's this great news that's going to come out about a company tomorrow. We don't wait until tomorrow to buy the stock. We buy it right away.

So today, there aren't a bunch of new people buying the stock and driving Samsung's price up, partly because of those expectations and partly because of good old-fashioned market uncertainty.

It's a chipmaker, and that's great, but nobody knows how to value a chipmaker.

Business professor Eric Gordon at the University of Michigan says Samsung is operating in a really volatile industry.

One day you hear that AI is going to eat all the chips we could possibly make. The next day you hear, oh boy, AI is going to be cutting back. It's too expensive. Maybe we don't need as many chips.

Gordon says the news today was just based on a preliminary earnings report. Samsung stockholders now are going to look for the full report at the end of the month, which will have more insight about where the stock and the AI industry are headed next. I'm Kaylee Wells for Marketplace.

The idea that we're all getting older isn't or it shouldn't be news to any of us. The idea that the baby boomers are getting actually already are older is going to turn out to be a very big economic deal. That particular demographic cohort accounts for more than half of this country's total wealth. Half of it. That includes earnings, returns on their investments, real estate holdings and also businesses. And just like we're on the verge of a multi-trillion dollar generational wealth transfer, so too, as Marketplace's Kristen Schwab reports, are we on the verge of a whole lot of small and medium-sized businesses changing hands or disappearing.

John and Dave Zavril spend a lot of time together. For one, John is Dave's uncle. So there are birthdays, holidays and racquetball.

Every morning, John says, at 5.30 a.m.

I used to pick him up and bring him the racquetball, and now he drives himself. Yeah, that's true.

The early start time is not negotiable, because they both have to get to work at R.J. Zavril & Sons, a construction company in East Grand Forks, Minnesota. John is the second-generation CEO. Dave, part of the third generation, is vice president.

Does it seem strange from the outside that, you know, the people that I go to work with every day are the same people that I hang out with on the weekends or spend holidays with?

It's worth pointing out that 29 of the people who work here are related.

Yeah, I'm sure it does seem strange. You know, I often get the comments from people who's like, well, how do you make that work?

Five family members own equal shares of the company. John, the CEO, is teaching them everything he knows about running the business.

Right now, they're being groomed. I mean, and we meet once a week, and we all kind of do a consensus of what direction we're going.

Because the family is about to make a big business decision. They're going to vote on who will take over when John, who's 65, retires. Pretty tricky, no?

Yeah, I think it's going to be based on strengths and family dynamics are involved, but I think it'll all work out.

R.J. Zavril & Sons is one of six million small and medium-sized businesses expected to change hands over the next decade as baby boomers move into retirement. Nick Noel is a senior fellow at the McKinsey Institute for Economic Mobility.

There's going to be an oversupply of businesses that are going to be available. And if they can't find folks that are willing to buy, those businesses that are otherwise viable will have to shut down.

Noelle expects one and a half million viable businesses will disappear. And in states like Montana, Vermont and Maine, small and medium sized businesses make up half of total employment.

It really does become a crisis for economic development, for community vitality, employment and economic mobility in those places.

Unless more buyers emerge. Chris Schumacher is the co-founder of New Majority Capital, a nonprofit that helps connect aging business owners and new entrepreneurs.

The clear majority of the businesses that we purchase are from retirees.

Schumacher says it takes a lot of preparation to get businesses ready for sale. He ran into some of this himself a handful of years ago when he bought a company that makes garden trellises.

You know, the owner didn't have a computer. He did all his work on lined paper.

So there are operational issues. Also, older business owners are at a life stage where they are thinking not just about how much money they can make through a sale, but what they're leaving behind.

They've built a business for 20 to 30 years. They have a legacy. They have their names on the trucks that they see driving down the neighborhood that they're going to be living in. They want to see that continue.

It's something the family at R.J. Zavril & Sons, the construction company in Minnesota, is grappling with right now. Here's John, the CEO.

These guys are going to make a decision to either keep it as a family business or to sell out.

The firm has grown so much, it's become the second largest employer in town. And Dave, the current VP, says it's kind of turned the work of excavation and asphalt paving into a totally different job.

The hard work and the technical skill made us really good at what we did, right? And now this business is becoming about running a business really well.

They'll have to decide whether running it well means keeping it in the family or selling it to someone else. I'm Kristen Schwab for Marketplace.

health care in this economy is challenging it's expensive it's oftentimes harder to get than it should be. And with apologies to my insurance industry friends, I mean, health insurance. Am I right? So a headline in Vox the other day caught my eye. When did getting prescriptions start feeling like online shopping, it said? A lot more people are looking to urgent care and online pharmacies for the care that they need or the prescriptions they want instead of seeing a primary care physician. Dylan Scott wrote this story in question. Welcome to the program. Good to have you on. Thanks for having me. Could we, first of all, I guess, define some terms here it's it's your term of art for the state of a slice of health care in this economy right now drive through health care what exactly do you mean yeah so i thought of this in the context of like if the

old-fashioned family doctor was like a family restaurant where it's like they knew you, they knew your order, you'd been going there for years. Then this kind of healthcare service that has become really prominent in the past few years is what I think of as drive-through healthcare, where it's more of like a one-time only. You're pulling up, you're looking at a menu, you probably already know what you want. You're selecting the products, you're ordering your Big MAC or your GLP-1 prescription. And you go through a very routinized interaction with a clinician, and that's that. And I think that's new. That's very different from the kind of traditional patient-provider relationship that I think a lot of us grew up imagining as the ideal. And so that's why I wanted to come up with some kind of term for this kind of new service that's really come into being here in the past decade or so, and drive-through healthcare clinic is what

I landed on. And honestly, it kind of works. I mean, I kind of clicked in right away and figured out what you were talking about. It is driven, as you say in this piece, by the inefficiencies, shall we say, to be kind, in the American health care system, the insurance quagmire that it is. Also, though, and I think this is important because there's a behavioral economics part of this, health care consumers want agency. They want to be able to get what they want.

Right. Exactly. I mean, I think a lot of people who have tried to schedule a doctor's appointment in the past few years. No, it can be really hard to do. Wait times are getting longer. There's fewer of the primary care physicians that you'd want to have in a long-term relationship available. And so, yeah, it's been a big push and it's a combination of things from like pharmaceutical companies pushing us products and being like, hey, go and ask your doctor about this. And you've obviously had the telehealth revolution, which has made it a lot easier to have this kind of instantaneous access with a healthcare provider. There's obviously an appeal to somebody being able to just go to a website and order the prescription that they want, especially if they're quite confident about it. But medicine is, you know, as much of an art as anything else. And like those longitudinal relationships between doctors and patients are how you like pick up on subtle signs that like, oh, maybe there's a problem developing and we want to try to get ahead of it with some early interventions. That's where you're sort of potentially missing a longer term, more serious issue because you're having this more superficial interaction with a healthcare provider. That's

where the concern comes in. For all the talk of how this is good, but also maybe not good. We do have to point out the glaring example of where it's a desperately needed service. And you point this out, obviously in your piece, the idea of abortion care and telehealth, especially since

dobs yes exactly i think that was a that was an example for me personally that really made clear that like there is a place for this kind of service and like you know i'm somebody who grew up in rural america i've been following closely like the development of minute clinics you know putting health care clinics in dollar generals things like that and i do ultimately have this kind of on the one hand on the other hand take on them because it is like the access is necessary and especially with something like abortion care in a post-dobs world where you might just live in a state where that kind of service is not available to you at a physical clinic anywhere, you know, within driving distance, being able to go online, have a discreet private interaction with a healthcare provider and get, you know, what is a lifesaving type of service is really

important. As the guy in this conversation who has thought more deeply about this than the other guy

in this conversation, this trend only continues, yeah? I think so. I mean, I think you've seen with the GLP-1 drugs that like, yeah, the sort of clinical scope of these practices is only expanding. It started out with like medical marijuana card clinics back, you know, 10 years ago where it was like, you just went to see a doctor and said you had XYZ so you could get a medical marijuana card. Like we've become accustomed to this type of service, this more transactional type of healthcare. And the question will just be like, when does it make sense for me to use this? And when am I kind of taking a risk if I go for this kind of one-time only healthcare with something like weight loss treatment, where I might really benefit from a long-term relationship with the provider.

Dylan Scott is at Vox. He covers healthcare there. Dylan, thanks a lot. Fascinating piece.

Thank you so much.

coming up some of the busiest shopping days that we have all year talk about christmas in july

right first though let's do the numbers dow industrial's down 130 points today a quarter percent finished at 52,925 nasdaq down 302 that's 1.2 percent 25,818 the s&p 500 slid 33 points, four-tenths percent.

75 and three. SpaceX joined the Nasdaq 100 today less than a month after its market debut. While some of the big banks are bullish on the give or take $2 trillion rocket company and AI company and satellite company, investors felt otherwise. SpaceX down 6.8% on the day. It was 98 years ago today, 1928, that the bar for the greatest thing ever was set when the Chillicothe Baking Company in Chillicothe, Missouri sold for the first time pre-sliced bread. At the time, it was called, and this is a quote, the greatest forward step in the baking industry since bread was wrapped. Flour foods, they sell like Wonder Bread, Nature's Own, and all the rest. Lost a tiny slice, down one-tenth of one percent. You're listening to Marketplace.

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Okay, let's get real about health care for a second. I think we can all agree it doesn't always work the way it should. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know what I mean. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a health care company linking patient care and pharmacy services and using data and technology to drive the whole system. So care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is bringing costs down, saving patients money and making it easier to get refills. Little by little, Optum is helping make health care work as one for everyone. Head to business.optum.com to see how.

This is Marketplace. I'm Kai Rizdahl. We did an interview a month or so ago about federal banking charters and how the Trump administration is looking to issue more of them and how more companies are eager to get them. Crypto companies, car companies, also buy now, pay later companies, which gets us to the latest entrant, Klarna, the Swedish financial technology company, fintech, if you're in the know. It is known mostly for its buy now and pay later offerings, but it has applied for a bank license in Utah and wants to become Klarna Bank USA. It already is one, a bank that is in Europe, and getting the U.S. seal of approval would let it grow beyond its current offerings. As marketplace's Samantha Fields reports, Klarna is kind of part of a fintech trend. PayPal also wants to be a bank now,

So does Affirm, which, like Klarna, is best known for buy now, pay later. And Mercury, another fintech company, just recently got conditional approval to establish a bank. Michelle Ault at the Claros Group says fintechs are making this move now for two main reasons.

Number one, duh, the Trump administration. Regulators are open to new bank formation in a way we haven't seen ever. And just as important, she says, is reason number two. Which is, in the U.S., a bank charter, a banking license, provides the...

keys to the financial kingdom. And who wouldn't want those? Those keys open up all sorts of options that fintech companies wouldn't otherwise have. Thomas Piskorski at Columbia Business School says that includes the ability to hold deposits. The huge advantage of being a bank is that you

have access to insured deposit funding that often allows the bank to finance themselves at a rate

well below interest rate. Which is an appealing prospect. Banks are subject to much more government regulation and oversight than fintech companies, regulation that got much tighter after the financial crisis of the late 2000s. As a result of that, the lending activity,

especially in consumer finance, has been migrated to non-bank institutions like Klarna or non-bank

mortgage lenders in the mortgage space. But at this point, more than 15 years post-Great Recession, James Wester at Javelin Strategy and Research says the benefits some of these companies could get from having a banking license outweigh that extra regulatory burden.

A lot of it has to do with the fact that fintechs have grown up.

Many fintech companies have been around for a while now, and they're looking for new ways to scale and grow.

There are limitations in the model that they had been built on, and the only way they're going to grow is to grow up, is to become more like a bank.

And that means getting a license. I'm Samantha Fields for Marketplace.

We started today with a corporate view of this economy, both the macro from Mitchell and the micro from Kaylee. There is more business-centric data coming to us this week. We'll get a look at wholesale inventories for May tomorrow. That comes courtesy of the Commerce Department. Also, consumer credit for May from the Federal Reserve. Again, those are macro. So we're going to do that thing we do and go micro. Annie Lang Hartman is one of our retail regulars. She runs the stationery and gift store Wild Letty in Leelanau County, Michigan.

Right now, business for Wild Letty is really, really great. It's always the week before and the week after the 4th of July is when we get some of the busiest shopping days that we have all year. this year we are seeing a wild amount of growth again which is fantastic and i feel like this year there's a steep learning curve of trying to figure out what our inventory reorder points are now that we're selling at this really fast rate that we have never dealt with before um most things we can get within one to two weeks restocked on the floor so that is definitely my biggest challenge right now is trying to stay on top of that our costs are pretty spot on for what they have been in the past um the biggest thing is we are getting such a huge heat wave And it's been a very warm summer that our utilities are going to be pretty high for this summer season. So that's the only thing I'm really thinking about as far as a significant change to our costs for the year. The busy summer season, I'm really just hoping that things keep running the way that they're running. I'm feeling pretty good, especially after the last two years of just growth and gaining more customers, seeing a return customer rate go up every year. It's been pretty exciting.

Annie Lang Hartman. She runs Wild Letty up in Leelanau County, Michigan. This final note on the way out today, I will give you all two economic data points. You decide which one you like. The Commerce Department announced the May trade gap today, the difference between what we sell overseas and what we buy from there. We are importing more foreign pharmaceuticals and cars and equipment for data centers, and we are exporting less. on that list is gold, natural gas, domestically made pharmaceuticals. So the trade gap got bigger. The president's tariffs notwithstanding. Also, and item two, in one of its regular consumer surveys, the Federal Reserve Bank of New York says we, that is consumers, are thinking inflation is going to be higher over the next year than the last time we asked.

Just 3.7% is what we are thinking year over year. Jordan Mangi, Zoniel Maharaj, Janet Nguyen, Olga Oxman, and Virginia K. Smith are the digital team. I'm Kyle Rizdahl. We will see you tomorrow, everybody. This is APM.

I'm Amy Scott, host of How We Survive, a podcast about the messy business of climate solutions. To a lot of people, geoengineering might seem like a dangerous, outlandish way to play God. But some are embracing this sci-fi-inspired approach as a solution to the climate crisis.

We're going to launch some balloons and send them into the stratosphere. A constellation of sunshades would cast an even dimming of shade across the entire Earth. Investing that much in building anything in space creates the whole space economy.

Listen to How We Survive on your favorite podcast app.