Today's Media Hit (12/13/24)
Friday the 13th Edition
I got bumped from yesterday’s 9:30 AM segment in favor of President-Elect Trump’s ringing of the opening bell for the NYSE. Incidentally, all I could think of when I got the news was Anita Ward’s 1979 classic, “You Can Ring My Bell,” which is probably not a song that one should associate with the opening of the stock market…
Today, I’m pinch-hitting this morning for my friend and colleague, Tom Savidge, who is down with the sickness. The links for this morning’s segment are below:
https://www.cnbc.com/2024/12/12/stock-market-today-live-updates.html
https://abcnews.go.com/Politics/overdraft-fees-capped-5-new-federal-rule/story?id=116704454
Nothing really about the CPI report, the PPI report (well, this is sort of touched on), or the much-less-talked-about Import and Export Price Indexes report. Maybe I’ll try to work that last one in somehow. Anyway, on to my quick thoughts/notes/talking points on the links provided and then the “what happened” section.
Stock futures rise
Day-to-day changes in stock prices are a volatile measure of, basically, everything. It’s unwise to use them as predictive in any capacity, instead we need to look at medium- to longer-term trends.
Here, the overall picture is clear: the economy isn’t doing so great.
The Fed still hasn’t managed to bring inflation down to 2%
Unemployment remains at about 4.2%
2-3 million job vacancies at the moment
A decrease in hiring rates
All of this is suggestive that investors are looking to put their money somewhere safe and for a longer term and to see what the incoming Trump presidency actually does in its first 100 days. Is he all bluster or is there substance? What will he be able to deliver on and, importantly, how will it be delivered on?
Bezos Meets with Trump
Jeff Bezos, through Amazon, is donating $1 million to the Trump inaugural fund in addition to streaming the Inauguration on Amazon Prime, which is evidently a separate, in-kind gift valued at another $1 million.
Look, this isn’t surprising. Tech giants want to meet with Trump to try to either make sure or convince him to either leave them alone or give them exemptions. $1 million is basically pocket-change to Bezos, who is evidently worth over $240 billion. And it’s pocket-change to Trump as well. But the symbolic gesture is potentially worth a lot more to Amazon and Bezos.
It is interesting, though, to see the shift in Bezos’s treatment of Trump. At one point, Bezos jokingly offered to send Trump to the moon. Now, Bezos is trying to curry favor, saying things like, “oh, Trump has mellowed out and I think he’s got himself settled into the role now.”
Capping Overdraft Fees
This is yet another instance of government trying to institute a price control on an industry. And it will have the same predictable result: a shortage.
And what’s more, this isn’t a widespread problem. It’s a problem that a vanishingly small number of people have, according to the CFPB.
Now look, overdraft fees sound ridiculous: the bank charges you money because you don’t have enough money.
But what these fees really are is two-fold: 1) a deterrent against spending more money than you actually have in your account and 2) a fee for the micro-loan you’ve implicitly taken out.
Obviously, these fees are primarily paid by low-income households and by people living paycheck to paycheck. We don’t see, for example, Bezos over-drafting his checking account, so there’s an emotional call to “do something” about them.
But here’s kind of the thing: banks could just simply refuse the payment at the terminal instead of allowing people to overdraw their account.
So what effect will this law have?
We already see banks voluntarily lowering, eliminating their overdraft fees altogether, or allowing a grace period to cover the difference and avoid the fee altogether. So at some level, this is simply codifying the direction the industry is already moving in.
Smaller banks are going to be hit hard by this, leaving more room for bigger banks, who are better able to absorb costs such as this, in the market.
We’ve seen what having too many banks that are too big has done to an economy. I don’t really want to go through another 2008, especially now that I’m old enough to have my own kids to worry about.
So What Happened?
I was joined by Richard Stern of the Heritage Foundation again. It’s always nice to go back on with someone you’ve been on with before - you know a little bit about what they’re going to say, whether you’re going to have to (gently) correct them on-air, etc.
I was first asked about the stock market and the PPI figures, so I used that as an opportunity to talk about the difficulty of actually lowering inflation and how we need monetary policy reform, since the Fed (and Powell) have promised 2% inflation now for over a year, but we also need federal spending reform if we really want to lower inflation.
Fortunately, we had enough time to hit all three topics this morning and I got asked about the overdraft cap, which is the one I really, really wanted to talk about and I might end up writing a short article for AIER’s The Daily Economy about it today.
I got pretty much all of my talking points above in, including the joke about charging people money for not having enough money, which Shaun Kraisman, one of the anchors, thought was funny enough to laugh at on-air and retell at the close of the segment.
All in all, I think it went really well. My only quibble is that I noticed that my camera was mirrored on air for some reason, which is annoying, but oh well. This hasn’t been a problem in the past, so I’m not sure what happened. Oh well.