00:00I want to get your reaction specifically to the market's reaction to those headlines by President Donald Trump.
00:06The idea here that in his words he sees an end to this war soon.
00:10A market that seems to want to find any excuse to see that light at the end of the tunnel.
00:15That's certainly what it seems like.
00:17But it's hard to imagine that this can be wrapped up as quickly as he suggests.
00:23Only because the risk premium is constant.
00:27No one's made it through the Strait of Hormuz, which means that oil prices will stay high for longer.
00:35And the big question is, who goes first and who's going to take that risk?
00:40Because there are still, there's still, Iran is not completely de-armed and there's still risk to that.
00:51And so the oil price being so high throws the entire market equation off.
00:58Because not only does that impact emerging markets that have been doing really well, but obviously it impacts the U
01:05.S. economy because it throws a monkey wrench into how well the consumer can hold on and can hold up
01:11with higher oil prices.
01:12So that's something that I'm looking at very carefully.
01:15You know, the bottom 60 percent of households have been really struggling.
01:19And those are the households that are going to be the most impacted by higher oil prices.
01:24So I wish there was more certainty, but it looks like there's actually less certainty.
01:29Well, that's what I'm curious about, too, because we should point out the Energy Secretary, Chris Wright, he was speaking
01:33to CNN over the weekend.
01:35He was talking about that, quote-unquote, fear premium in oil markets and, in his view, how quickly that premium
01:40can come down.
01:41And it seems like we got a little bit of a taste for that.
01:44But the big bugaboo and something that sort of I've had a hard time wracking my brain around, we know
01:48the oil is there.
01:49We know it can be produced.
01:51The real issue here is how do you get it out of the Persian Gulf?
01:53And we have yet to hear any sort of a truly articulated plan as to how ships can safely get
02:00in and out of the Persian Gulf.
02:02Right. I don't think it's a question of insurance costs.
02:06I think it's a question of reputation risk.
02:09Who's going to be the first to go through and if they lose a ship and what crew would go
02:14on that ship?
02:15So they're big questions.
02:17I mean, Taiwan, I think, has, what, six, seven days of energy left.
02:21There are a lot of real supply chain risk issues that are very serious.
02:28And I think the market hasn't priced that in.
02:32And, Meredith, I want to bring this back to domestic shores as well and talk about affordability.
02:37It's a topic I know that you've done a lot of work on.
02:39And you think about some of the ructions that we're seeing in the oil market already at pumps across the
02:44country.
02:45You're starting to see $4 a gallon gasoline.
02:48And I wonder, you know, how that fits into the administration's push so far for affordability.
02:54We know that the midterms are coming up in November.
02:57I have to imagine.
02:58And we know that President Trump is watching the price of oil very closely.
03:03I have to imagine gasoline costs as well are top of mind.
03:06Yeah, I think there are a few things that I'd like to bring up.
03:10So the price of oil, obviously, is going to be very and gasoline is going to be very tough on
03:13the 60 percent of households that are living paycheck to paycheck.
03:17Very tough. And when we talk about them living paycheck to paycheck, it's gotten worse than that because the growth
03:24in earned wage access has been explosive.
03:28This is where you, you know, for many households that can't even, like, earn, like, live paycheck to paycheck, they'll
03:36access a portion of their paycheck, pay a fee to access a portion of their paycheck before their paycheck is
03:43even due.
03:43So I think the bottom 60 percent of households are worse off than it appears to be.
03:51And so this is going to be really, really strenuous.
03:54In terms of affordability, there's not much that can be done, let's see, even with home prices, because just as
04:03you have a case-shaped economy, you have also a case-shaped credit availability.
04:08So there's plenty of credit.
04:10You know, banks always love to lend to people who don't need it.
04:13But there's incredible available credit for the top 40 percent of households.
04:19But I would say there's, I would argue, there's a paucity of credit for the bottom 60 percent of households.
04:25So there's really no wiggle room for them.
04:27Well, when, again, it comes to gas, I mean, bringing up the taco trade feels glib at this moment.
04:32But the idea that, you know, maybe it's not necessarily what we see in stock markets, maybe it's the oil
04:39market, maybe it's gasoline prices that ultimately act as sort of a restraining sort of brake track when it comes
04:46to President Trump's actions in the Middle East.
04:49I wonder if that theory holds water with you.
04:52Well, I think this is just a, it's the fragility of this last, I can't believe it's only been 10
04:58days, but the fragility of the last 10 days has increased dramatically.
05:03You know, there's, there are not a lot of easy levers that can be pulled for affordability.
05:08So, you know, the cost of services has gone up dramatically.
05:12The cost of household insurance has gone up 70 percent over the last five years.
05:16So people are really, really struggling.
05:19I think that the cost, a cost of gasoline puts them over the edge.
05:25You know, there's a bill, reconciliation of bill between the House and Senate on affordable housing.
05:31I don't think that gets done fast enough and can impact the housing costs fast enough.
05:37And I think the tax refunds and the AI spend on data centers that the, that the administration is counting
05:44on, you know, the close to a trillion dollars in data center investments, you know, it takes at least three
05:50years to build out these data centers.
05:51So let's like, let's handicap that and say 250 billion goes into the economy at best.
05:57You're just not going to have as much fiscal stimulus, I think, as people are hoping for, you know, expanding
06:04credit with probably is their only best guess in so far as they can do that.
06:10But you can't make banks and lenders do something that they don't want to do.
06:14And they've really pulled back from subprime.
06:16And that's, that's put additional strain on the bottom 60 percent of consumers.
06:21I'm also curious just about the idea of potential job destruction.
06:24And I don't mean that in the extreme gloom and doom that some of the naysayers do.
06:28But when you start to hear companies talk about their productivity improvements, but also at the same point, mentioning, you
06:35know, very delicately that they may not necessarily need as many workers.
06:39Some companies going so far, whether you believe them or not, that they can maybe do without 40 percent less
06:44than what they had previously.
06:45Is that all of a sudden become a situation where the tailwind from AI on the economy could potentially also
06:52become a bit of a headwind if it does actually put people out of work?
06:56Well, I mean, that's a question that was dominating the airwaves and investor conversations prior to the war in Iraq.
07:04But I look at this as, you know, the block situation was an isolated incident.
07:10Many companies front and loaded hiring after COVID.
07:14They were afraid that they were never going to get employees, that there was going to be an undersupply of
07:19employees.
07:19They over indexed the way I think a lot of home sales were front and loaded in during the COVID
07:27years.
07:27So you've seen the first stage was companies saying you had to return to office.
07:33And so then, you know, you called off a lot of the herd there and then companies started to lay
07:41people off.
07:42But, you know, the example that I like to give is, you know, the last major tectonic shift you saw
07:48was retail with online sales.
07:50So in 2000, you had less than 1% of all retail sales come from e-commerce.
07:57And there were roughly 15, just over 15 million customer-free saying retail employees in the country.
08:06Fast forward to 2025, 16.4% of all retail sales are done on e-commerce, online sales.
08:14There are still over 15 million customer-facing retail employees.
08:20So it's not as wildly disruptive as possible.
08:24Now, as a percentage of total employment, retail jobs have gone from 11.4% down to 9.7%.
08:33So, yeah, the job concentration shifts.
08:36But the fact that there's still the same number of jobs, I think, is telling.
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