Muse

This podcast is supported by Raymond James, a financial firm offering wealth management, banking, and capital market services that are inspired by people. Before Raymond James financial advisors build plans, they build relationships so they can craft individual strategies designed to achieve priorities and pursue what's possible. That's the power of personal. Disclosures at RaymondJames.com. Raymond James and Associates,

Inc. Member NYSE SIPC. When you're at work, you never know when you'll be interrupted. But with the Dell Pro, powered by Intel Core Ultra with vPro, no matter what distracts you, your laptop won't. It's battery-optimized for the way you work, with built-in intelligence that quiets distractions when you need to focus. Your laptop will help keep you locked in, even when it's bring your dog to work day. Built for those who stay in the flow. The Dell Pro. Built for you.

Dell.com slash Dell dash pro. That ceasefire that wasn't really a ceasefire? Well, it's over and the economy would like a word. From American public media, this is Marketplace. In Los Angeles, I'm Kai Risdahl. It is Wednesday today. This one's the 8th of July. Good as it always is to have you along, everybody. The president is on his way back from that NATO summit in Turkey. Before he left, though, he did say the ceasefire was over. And both sides, according to reporting as of this moment, are shooting at and or bombing each other. And for For those of us for whom the economy is our concern, I mean, here we go again. We've gotten Robin Brooks back on the phone to talk things over. He is a senior fellow at the Brookings Institution. Robin, thanks for answering the phone when we called. Yeah, of course. Great to be with you, Kai. Last time we had you on talking about the subject at hand, you said at one point in that conversation, you know, I think traders have to get their risk premium realigned. They're not they're not pricing in the eventualities, as it were. And congratulations, I guess.

Yeah, you know, when you and I last spoke a couple of weeks ago, I think we said oil needs to trade in a range of 80 to 90 dollars a barrel. And of course, it fell quite a bit below that before the most recent flare up. We were all the way down to 70, 72 dollars a barrel. And I think the reality is the world is a complicated place. This peace deal is a complicated peace deal. And so, yeah, better to be cautious.

Crude today, either one of your your main benchmarks, Brent or West Texas, up six and a half, seven ish percent. Going to go up a little more, right? Crystal ball this for me.

so the big issue is that we don't really know when we are negotiating with iran who we are negotiating with yeah and the big problem is that there are hardliners in iran who think that they can extort more from the united states and so this is basically about cash and about control of the Strait of Hormuz. And the most recent rockets or drones or what have you that were launched at oil tankers trying to transit the Strait, that's basically about exacting leverage. So I think we are on the verge of going back to a hot war. And that obviously will push oil prices

up. Let's go to the offhand-ish remark I made up in the open. The economy would like a word. Obviously, oil prices will trickle out through this economy. Consumer spending will be hit by

it. I mean, play it out for me. When we started all this oil prices, or rather prices at the pump for drivers in the united states we were around three dollars a gallon on average in the united states we went all the way up to four and a half we've been at 380 roughly on average in the united states and obviously this is going to push the price of the pump back up right so it's not good for the u.s consumer and it's going to feed resentment and fears over affordability so that's not good. I think there's going to be a lot of pressure to try and cobble a deal back together. My recommendation to the US is, you know, the blockade that

we did on Iran was highly effective. I've written about that a bunch on my sub stack. And there's many ways to show that it did work. And in the end, if the problem is that there's hardliners in Iran who think they have a ton of leverage, well, it's time to hit them back again. And I think there is a way to make the blockade even harsher and tougher. And I think you just got to go that route if these guys don't stick with a piece deal. Let me just ask you, though, you know,

we talked last time about how you had great perspicacity in your prediction that oil was not going to go to $200 a barrel for reasons that you laid out in your substack. Are you still that

sanguine? You got like 30 seconds. Yeah, I think the shock is basically the same. So if you think back to the worst moments that we've had oil basically topped out around 125 126 dollars a barrel i think that's the top that we'll see now too if we really go back to a bad conflict again

super quick and this time i really mean it 30 seconds uh fed minutes today um some insights into what happened behind closed doors uh at that last meeting very interesting to me that there were some people on that committee who said, yeah, you know what? Maybe we ought to raise rates now. This was like a couple of weeks ago. It makes sense of that for me. Again, 30 seconds.

So someone really famous I know named Kai Risdahl tweeted after the Fed decision on June 17th, wait a minute, this hold was unanimous. And so actually it wasn't as hawkish as people thought or have thought since then. And I think the minutes kind of lean in that direction, Kai. So you win this one. I don't think the minutes were that hawkish either.

All right. Fair enough. Robin Brooks at the Brookings Institution. Thanks, Robin. Take care. Wall Street on this Wednesday. Oil we talked about. Equities could have been worse. Actually, bond traders not all that happy. Details, numbers, when we get there. As Robin and I just spent four or five minutes talking about, five minutes and two seconds, actually, by my stopwatch, there is a lot up in the air right now with the war and interest rates and inflation and oil, all of that. But retailers still do have to take their best guesses as to what their economic future holds. Because even though summer's in full swing, right about now is when companies are preparing for the holidays. Marketplace's Kristen Schwab made some calls.

One of the foods trending on social media right now, dot cakes. Single-serving desserts in cups covered with rainbow sprinkles. And Erin Calvo-Bachi can't make enough dot cake peanut butter cups to keep up.

Our nonpareils are suddenly very popular. We have seen a 40% spike, which is insane.

Calvo Bocci owns CB Stuffer, a chocolate treat maker in Massachusetts. She says a trend she's less excited about, one that unfortunately seems here to stay, is inflation in key ingredients, like peanuts.

We've received word that that price is going to increase.

Shipping is going up. Also, the boxes CB stuffer ships candy in. So to avoid paying extra, Calvo Bacci has ordered ahead. She's bought enough containers to get her through the end of the year. It means she's dedicating a lot of warehouse space and a lot of cash to packaging.

It's become, okay, fine. What additional cost am I facing today?

Most of the business owners I checked in with say business conditions are more certain than they were a year ago when trade policy seemed to shift every day. But they're still operating on eggshells, so a lot of them are ordering ahead. Containerized freight rates have reached their highest prices in nearly two years, in part because business owners are trying to rush in holiday inventory before new tariffs are expected to begin.

I was really just afraid of another erratic, unexpected tariff coming, so I stocked up.

Greg Sugar at Bowties of Vermont now has enough fabric to get him past the holidays and into 2027. It means leaning into more standard designs like the classic black tie.

We try to make it a little interesting adding either different fabrics like a grenadine silk or velvet. Men's neckwear trends, fortunately, don't change too drastically too quickly.

Sugar has recently had to raise prices. So has Ashley.

Sims, who owns Humans Before Handles, a jewelry brand in Atlanta.

We have, but we've done our best to still stick to our motto, which is everything under $50. I kind of have a running joke, like we're bougie on a budget.

Sims says online sales are down, but in-person events are performing well. Her next ones are back-to-school pop-up shops at nearby universities.

People are making a lot more conscious buys, so people are stretching their dollars right now. And in person, people are still very excited to shop with us.

Business owners tell me they're getting mixed messages from consumers. And they're trying to decipher what that means while also trying to sort out the future of trade policy and the economy. Erin Calvobacci at CB Stuffer says you just kind of have to put your head down, drown out the noise, and keep working.

It's a really great business philosophy. It's called a wing and a prayer. That's what I'm using right now.

In reality, it's mostly lots of planning ahead and maybe a little luck. I'm Kristen Schwab for Marketplace.

Mitchell Hartman did a setup piece for us yesterday about second quarter earnings season and how, by and large, publicly traded companies are expected to have done pretty well April through June, despite all of the geopolitical, you know, messiness. Also and related, a lot of companies have been issuing a whole lot of new equity, selling brand new shares to raise capital. Marketplace of Justin Ho has more on this wave of stock issuance and what it might mean. Up until this year, companies were hesitant to issue new shares.

This has been a fraught couple of years when it comes to a changing environment, a changing environment in the markets, a changing political environment.

Kreeti Gupta is a senior strategist with J.P. Morgan Private Bank. She says this year, demand for stocks picked up since markets have been rising.

This is companies that are buying back shares. This is households and retail investors that are getting more excited about the stock market gains that they're seeing.

Companies also need the money, in part for mergers and acquisitions, which have been booming this year.

That process takes fundraising. And we're in an environment where consolidation is something that corporations have been encouraged to do.

Issuing stock isn't the only way companies can raise money. They can also sell bonds. But Drew Pasquarela at Cornell University says that requires companies to pay back the money they borrowed over time, which can be risky. So by issuing shares instead?

They're taking less risk in that they don't have to pay it back and they're not burdened by that eventual need to return the capital by contract to the investor.

Pasquarela says that's why companies in the AI sector have been issuing a lot of stock, because they don't want to be hamstrung by the need to pay back bondholders.

And they're looking for investors to believe in their story and take on additional risk by becoming owners in the company.

Healthcare and real estate companies have been issuing new shares, too, along with companies with ambitious expansion plans, says Matt Kennedy with Renaissance Capital.

I mean, we had a quantum computer company go public recently, a developer of next generation geothermal energy.

Kennedy says their plans are long term, despite all of today's geopolitical uncertainty.

Some of these companies are targeting five or 10-year timelines.

And Kennedy says investors are more comfortable making those long-term bets because the stock market has been holding up. I'm Justin Hough for Marketplace.

coming up more drops and more drops and more drops eventually you're filling up the bucket

with something different than what you started with well you know when it rains it pours but first let's do the numbers down industrials down 576 today one and a tenth percent finished at 52 348 nasdaq crept up 51 points about two tenths percent 25 870 s&p 500 down 21 points three percent ended at 74 and 82. Just to give you some numbers on the oil thing that Robin Brooks and I were talking about, Brent crude, $79 at one point today. That's per barrel, obviously. West Texas Intermediate, $74 a barrel. Retailers, you ask, after Kirsten Schwab's piece? Walmart gained 1.4 percent on the day. Target improved 3 and 8 tenths of 1 percent. The budget retailer Dollar Tree added 8 tenths percent. Bond prices went down. The yield dust went up 10 years at 4.57 percent. and you're listening to Marketplace.

7,700 institutions, including nine of the top 10 banks. Built with trended and alternative data, VantageScore is more predictive, scoring 33 million more consumers than conventional credit scores. Now accepted by Fannie Mae and Freddie Mac for conforming mortgages, VantageScore 4.0 safely unlocks approximately 2.7 million new mortgages and up to $1 trillion in new loans. Better credit score, better data, better mortgage decisions. VantageScore.com.

Intuit QuickBooks Payroll is an essential tool that business leaders have been using to integrate payroll, time tracking, HR, and financials together into an all-in-one command center. And the recent evolution to QuickBooks Workforce can help you scale and grow your business by giving you the full picture. QuickBooks Workforce doesn't just sync your HR, payroll, and financial data, but connects them through an integrated hub so they can work together with smart automation. Get a single, consistent view of your workforce and your business performance so you can turn data into clear, actionable business insights. And as your needs evolve, QuickBooks Workforce evolves with you, bringing flexibility to adapt to your business's specific needs. Integrate your business and see the full picture by making the switch to QuickBooks Workforce today. Learn more at QuickBooks.com slash workforce. That's QuickBooks.com slash workforce.

This podcast is supported by Dell. Back to school starts now. Get long lasting battery life on the Dell XPS laptop powered by Series 3 Intel Core so that you can work from anywhere. Now starting at $699 with exclusive student pricing starting at $599 and it's lightweight, portable and packed with enough processing power to make multitasking a breeze. So say goodbye to distractions and hello to more free time because you finished your work faster. Complete your setup with savings on select monitors and more must-have electronics and accessories. Limited time deals and free shipping on PCs and more await you at dell.com slash deals. That's dell.com slash deals.

This is Marketplace. I'm Kai Risdahl. We're going to do energy in the second half of the program, electrical energy to begin with. The Energy Information Administration was out with some new data today. Electricity use in the United States hit a record high last year. It's going to hit another record high this year and probably again next year, too. Data centers, yes, of course, but commercial power users more broadly, really, which the EIA says will, for the first time on record, use more energy than homes this year, and odds are next year as well. And, as Marketplace's Kaylee Wells reports, it is going to keep on being that way for a while.

There are two big reasons behind this shift. Let's start with the reason coming from the residential side. A.J. Chandra is CEO of the energy consulting firm Baker & O'Brien.

Electrical usage in households has basically been flat for a number of years.

Household power demand peaked in 2010. Then came better insulation and more efficient appliances and LED bulbs. We just got better at living comfortably on less power and less space.

Now people are probably reexamining that to a certain extent. We don't need, I don't know, 5,000 square foot houses if your kids have grown out of the house.

And while residential use stays flat, commercial use boomed after the pandemic, which brings us to our second reason.

I think the central piece of the story is data centers in terms of growth.

Akshay Jha teaches economics and public policy at Carnegie Mellon University. He says the shift in demand is because of an AI-driven boom in data centers, but also in how the energy from those data centers is being recorded. Everyday people using AI shows up on the residential side as the electricity needed to use your laptop. But that's a teeny tiny fraction of the power AI requires.

Let's say you're putting a prompt at the chat GPT. chat GPT on the back end is using data center compute in order to give you an answer to your

query. And that is commercial demand. So it's recorded as commercial energy use. Now, energy use in both sectors is expected to keep climbing. On the residential side, even as electric appliances keep getting more efficient, you may have a Tesla in your drive

and a home battery and a heat pump or something like that. Energy economist Caspian Conran at

Beringa says less gas and gasoline at home means using more electricity. And on the commercial side, Conran says the U.S. has arrived at a fourth industrial revolution. We're in the age of

electrons. We are in the age of compute and energy availability and power demand.

is a core component of that.

As long as the data center demand holds, the forecast says commercial power use will increase faster and keep outpacing the residential side. I'm Kaylee Wells for Marketplace.

All right. Energy of a different sort now, not how we power our homes and our businesses, rather how we get airplanes into the sky. Back in 2024, after the Biden administration created a bunch of clean energy programs, we spent some time looking into sustainable aviation fuel, SAF in the shorthand, an industry that the federal government back then was hoping to jumpstart. jumpstart. It's made from things like vegetable oil and beef tallow. It's cleaner than traditional jet fuel, but comes at something in the neighborhood of two to five times the cost. And it is, give or take, less than one percent of all the jet fuel used worldwide. So the government's series of tax credits and grants was meant to make SAF cheaper for both customers

and its producers. Government's critical, and it's neither just the government or just the private sector. It's the government and private sector working in concert that is going to enable

us to decarbonize aviation. That's a guy named Gene Gabolas back in 2024. He's the founder and CEO of a biofuels company called World Energy. Their customers are mostly big businesses, think Microsoft big, that pay World Energy for decarbonization credits that they get for paying for that more expensive but environmentally friendly jet fuel. Today is emphatically not 2024. The second Trump administration has ended all kinds of clean energy programs. And in part, as a result, we are hearing way less about companies trying to be carbon neutral. So we got Gene Gabolis back on the phone to talk things over. Mr. Gabolis, it's good to have you back.

It's terrific to be back. Thanks, Kai.

It's it's been a couple of years since you and I spoke. And I guess the first thing we need to do probably is sort of an update on the status of things in the world of sustainable aviation fuel and, I guess, to World Energy's point now, the decarbonization industry.

Well, I think we had talked right after an election and right before an inauguration. So to say things have evolved, it would be putting it lightly. Fair enough. Go on. uh well yeah it's a very different environment that we're in today in some ways but um in many ways it's it's it's very similar so i you may remember that we sell primarily to corporations who are focused on decarbonizing their activities and most of those corporations are carrying right along with their activities so our business is strong and things are good but certainly the

broader environment is quite different you know just on that on that topic of the broader environment and government involvement. You said when we spoke, and this is you, once it's really rocking and rolling, you don't need as much government intervention, but you do in the early going. Are you guys in the industry rocking and rolling yet, or are you still in the early going?

Well, I think it's somewhere in between those two. But what is happening is markets are playing a bigger role in decarbonization than ever before. And so in our work, companies that have made a commitment to do what they can do to decarbonize their activities are increasingly doing what we offer, which is a tool called insetting, which enables them to take the benefit from low carbon fuels to apply to their aviation activities. So that's very much growing and its applications go far beyond aviation. And so, yeah, I'd say that part of things very much are rock and rolling.

You know, it's just insets, just on the wordplay of this here, just as opposed to offsets, right?

Yeah, very much so. People know about carbon offsets, and those have been around for quite a while. The difference between an offset and an inset is insetting happens in the sector that you're decarbonizing. So if you're focused on aviation, in our case, we focus on the aviation fuel and the decarbonized activities relate to lower carbon aviation fuel. Gotcha.

You know, it was interesting to me that some, you know, reading up on you and world energy and what you guys have been doing the last couple of years, some of your clients, some of your customers are upfront about what they're trying to do with decarbonization. Others are not so upfront, but they're still doing it sort of behind the scenes, which strikes me as interesting.

It strikes me as interesting too. I can't tell you how many. I don't know how many times we've taken on a new client who's said we're happy to do this work, but at least for the time being, we'd rather do it quietly. And, you know, in some ways, that's not a horrible thing. I think that years ago there was a bit too much talk and a little too much, too little action. And now, to some degree, we've got really an increasing amount of action, but less talk. Yeah, yeah.

Can we talk geopolitics here for a second? And what effect has the president's war on Iran and all of that had on you guys? I mean, oil is more expensive now, which, you know, has to be good for you guys.

Yeah, in the near term, obviously, when conventional energy goes up in costs, ours become relatively more affordable. But it turns out for a whole bunch of reasons that continued reliance on fossil energy forever is not sustainable. But the work that we're doing is on domestically produced energy that is inherently more sustainable, not only on a climate basis, but on a national security basis and in a whole bunch of other areas. So, yeah, in the near term, yes, the changes in various commodity prices has been impacting us to the positive. But I think more importantly, is there this ongoing reminder of the need to transition to cleaner and more domestic forms of energy?

Can we talk about the sort of theoretical drop in the bucket here? I mean, SAF is like less than 1% of all the aviation fuel that we use on this planet or maybe in this country. I don't know, but it's a drop nonetheless. So you guys, by definition, sir, you have to be playing the long game. I hear your deep sigh there.

Yeah, yeah, no, it's obviously a question that you have to wrestle with. And of course, it's a drop in the bucket, and it's meaningless in the volumes today. But nothing's going to make much of a dent in the near term in a 150-year-old industry. So, yep, it's a drop in the bucket, but it's a small drop. And that drop, more drops and more drops and more drops, So eventually you're filling up the bucket with something different than what you started with.

With the understanding that it's your job to be optimistic but realistic for your company, are you holding on until there's a change of tone in Washington?

Well, the good news is our customer base is largely international companies. They play in lots of different environments. They don't play for any particular election cycle. Look, we live in democracies. And there's always going to be change. I think it would be foolhardy to think that we're always going to get, in any particular jurisdiction, the government that is 100 percent supportive. So it's not much of a business if it depends on a particular election cycle. And so, yeah, we're carrying on.

Gene Gabolis, company's World Energy. He's the founder, the chair, also the CEO. Mr. Gabolis, thanks for your time, sir. I appreciate it.

Thanks, Guy. I appreciate it. It's been great to be back with you.

This final note on the way out today, a quick aviation fuel addendum coming out of Gene Gabolas there. Saw this via the Associated Press data from the Bureau of Transportation Statistics about airlines and their jet fuel spending in May. $6.66 billion. That's up, and you probably don't need me to tell you this if you bought a plane ticket lately. Airlines jet fuel spending up 84% in May from a year ago. Our media production team includes Brian Allison, John Fokke, 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 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 a whole space economy.

Listen to How We Survive on your favorite podcast app.