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on the program today a theory about this week in this economy we'll talk live music in small clubs and hey is that a wilson's warbler i see up in that tree from american public media this is Marketplace. In Los Angeles, I'm Kyle Rizdahl. It is Friday today, the 22nd of May. Good as always to have you along, everybody. I'm just going to say this and then we'll see what Courtney Brown, she's at Axios and David Gurry, he's at Bloomberg. We will see what they have to say about it. I think this was a deceptively significant week in this economy. We'll see what they say. Welcome to the program, you two, on a Friday. Hello. Hey, Kai. Hi, Kai. All right, Courtney Brown, you get to go first. Here's my theory. The 30-year tops 5%. People get really worried about that. Fed minutes come out the other day. They show clear signs that an interest rate hike might be next. Forget a cut. Forget holding. They're thinking about hiking. Chris Waller gives a speech. Fed governor gives a speech today, the title of which is Policy Risks Have Changed. And And oh, by the way, Kevin Warsh takes over today at the Fed. Discuss my theory, please.

Yeah, it's like almost everything that happened this week in macro world pointed to this idea that rate cuts, which, you know, Kevin Warsh is under pressure to deliver. Just the case gets harder and harder to make. It's like every day this week through Friday, the case got harder to make. And it all culminates in that speech that you mentioned from Fed Governor Christopher Waller. Remember, he was basically on the on the front line of arguing for a rate cut not too long ago. Totally changed his mind because of the inflation data and other economic indicators that have come in this week. So I buy into your theory, Kai.

All right. David, David Gurra, join the club. Come on on board with my theory.

Yeah, I mean, it was a busy week, a lot of signal moments. You know, I think we had a great piece at Bloomberg this week looking at what we've seen in terms of long-term yields and the fact that manifest in all of that is this fear that inflation isn't coming down anytime soon. Yes, the war in the Middle East is contributing to that, but there are other factors at play as well. And I think you're right to cap it off with what we saw in the East Room of the White House today. That's Kevin Walsh being sworn in to the Fed, now the chairman, inheriting a very difficult job. I don't envy him. I think the president made a joke about that as well, that there are easier jobs than the one that he faces here. I think that remove that he had, the fact that that ceremony took place in the White House, was probably a nice thing because it was a bit more of an extended diversion from the fact that when he gets back to the Fed, if he wants to do all that he said he wants to do, implement all the reforms he wants to do, do what the president wants him to do, which is agitate for cuts. That is a harder and harder

mission for him to try to accomplish. Getting harder every day. And consumers and also the markets, Courtney Brown, are thinking inflation is going to be higher for longer. And we know what happens when expectations become unanchored, right? This is something that, again, referencing

Governor Chris Waller, who, you know, we should just say is an influential member of the Fed board.

He was nominally in the running to be the chair. Could have been in the chair.

Oh, that's right. Who could forget? So he mentioned this idea that inflation has been stuck over 2% for some time now. And he gave this fantastic analogy of a coin flip to describe how consumers might start thinking about inflation. Basically, if you flip a coin three times in a row in its heads, the consumer might start to think that maybe the coin is rigged or something, and he can't quite explain why that happens. But it's kind of the same idea with inflation. If we keep getting higher inflation, consumers might start to believe that this is just the new normal. And that's when the Fed starts to get... worried, right? Consumers start to believe higher inflations are coming. They start to adjust their actions in ways that make inflation more embedded in the economy and harder to beat.

David, there will be much ink spilled and airwaves transmitted, I suppose, to torture that analogy a little bit, over the changes that are coming to the Fed with Chair Warsh. One of them will be their communication style. And setting aside the fact that Waller clearly didn't get the memo with that speech today, less is going to have to suffice. Do you not think?

You know, I think that's probably the case. And there has been this roiling debate about forward guidance. You know, how worthwhile is the information that Fed policymakers are giving us in advance of meetings? I think there's a school of thought that a lot of these policymakers are recognizing the fact that there's a plasticity of this economy, that maybe that kind of advance notice isn't as good as it used to be, or that advanced thinking isn't as useful for markets and journalists like us as it used to be here. But I think this is the way that the new Fed chair is going to make the strongest imprint on the Fed in the shortest period of time. Look, he's going to have his work cut out for him with other kinds of reforms, as we were talking about. The wind is blowing in the other direction from cuts. It's pointing to hikes. But I think he's talked about the fact that he thinks policymakers say too much, they talk too often. He hasn't committed to having press conferences with the frequency that Jay Powell did. I think we're in store for perhaps some seemingly kind of radical changes there that bring us back to the way things used to be at the

Fenn. Courtney Brown, I come to you now in your capacity as a bond market expert, and I want to know from you when the bond market is going to say to the American economy, nope, we're done with you. We have had it. And then things go downhill really fast. Help me out with that one.

Scary prospect, I think. And like when you talk to people on Wall Street, this is the possibility that they always bring up, you know, what if, what happens if there is, you know, another type of recession, economic shock, and the U.S. needs to spend money to help the American people. And the bond market says, no, no, no, no, no, we're not, we're not doing that anymore. You know, and you have kind of the revenge of the bond market. We wrote a piece this week that I think is interesting with respect to Kevin Walsh. And it's kind of ironic that the cure for high rates in the bond market might be the high rates, right? Get the bond market to believe that Kevin Warsh is not going to defy higher inflation expectations and push through lower rates.

David, last word to you. You got 40-ish seconds on this one. I was going to ask you about consumer sentiment that came out today and, you know, University of Michigan data that is, you know, reliable with a grain of salt. But but the upshot is consumers are really, really angry and upset and cranky. And yet that doesn't change their spending behavior. So. So I guess I'm not going to ask you about that, but I'm going to ask you about why we pay attention to the consumer when we keep on spending. That's that's my question. Right. We keep on spending. We keep on spending.

Obviously, it's such a crucial part of this, the U.S. economy. I think we are seeing signs that, yes, with that grouchness, people are beginning to change their habits. They're still buying gas. They're paying more for it. They're spending less on other things. And I do think that sentiment data is key when you look at kind of a broader complement of other data that we're getting about how consumers feel. And they're worried. They're worried about how long inflation is going to be high, how high it's going to go. And they're worried about this war in the Middle East, which, again, we see these daily undulations, what's going to happen, what's not going to happen. But all signs indicate this is going to last for a while longer. And as gas prices continue to go up. That's just going to be a heavier and heavier weight on the American consumer. Right, right. And

then consumer economic sentiment, just super quickly here, consumer economic sentiment then

becomes a political problem for the White House. Absolutely. And they have to be aware of that. And they're trying all kinds of things to remedy that. None of it's worked so far. So it's going to be a bigger and bigger problem as we get closer to November. David Gurra at Bloomberg,

Courtney Brown at Axios. Thanks, you two. Thanks, Guy. Thanks, Guy. See you. Wall Street today. forget the war, forget inflation, forget consumers, and forget the Fed. All traders are caring about is earnings and AI. We will have the details when we do the numbers. Had you come to this program today looking for clarity on what's going on in this economy? Our apologies. It's complicated, as David and Courtney and I were just talking about. And a reading we got this week brings that home. S&P Global's Flash Purchasing Managers Index, we're talking May data here, is a close-to-real-time snapshot of pretty much the whole private sector economy. It's based on a survey of the people who do the ordering of supplies and finish.

goods at manufacturers, as well as consumer and business demand in the services sector. So that's the whole smash right there. And the results were, well, as I said, complicated. So it's a good thing we've got Marketplace's Mitchell Hartman to sort it all out for us. We start with an almost quote

from Charles Dickens. It's a tale of two economies. That's Chris Williamson, chief business economist

at S&P Global Market Intelligence. Manufacturing doing very well. Production leveled and order books in the last couple of months have been growing at rates we've not seen for four years or so. On the other hand, in the services economy, you've got a nastier turn, a near stalling of

growth. Let's start with manufacturing. It's booming for a couple reasons, says economist Bill Adams at Fifth Third Commercial Bank. Investment in data centers and in the AI boom. Also strong business investment driven by tax changes and the one big beautiful bill.

Adams says services, meanwhile, are slowing from headwinds to the real estate industry from high mortgage rates and hesitant consumer sentiment translating to softer demand for service-providing businesses.

It's important to note, though, we're not yet seeing a downturn in discretionary spending, says Rob Hayworth at U.S. Bank Wealth Management.

Consumer data like open table restaurant bookings and TSA throughput at the airports, all those are telling us that consumer behavior is not faltering.

One clear warning sign from the PMI report is sharply rising input costs for manufacturing businesses, says Scott Anderson at BMO Capital Markets, caused by

just the war itself, anticipate supply chain disruption, increasing transportation costs.

Which will only get worse with time, says Fifth Third Commercial Bank's Bill Adams.

The pickup in input prices is a big warning to the Fed that if the straits stays closed, if energy supplies continue to be interrupted, we are entering into a large inflationary shock. It's starting in the manufacturing sector, but...

If it lasts a few more months, he says, it'll spread through the whole economy. I'm Mitchell Hartman for Marketplace.

coming up they saw a bird that actually converted them they call it a spark bird grab your

binoculars, gang. But first, let's do the numbers. Dow Industrials up 294 today, six-tenths percent, 50,579. The Nasdaq added 50 points. That is two-tenths percent, 26,343. The S&P 500 gained 27 points. That is just shy of four-tenths percent, 74 and 73. For the week, the five days gone by, the Dow picked up two and three-tenths percent. The Nasdaq rose just shy of about a half percent. The S&P 500 added nine-tenths of 1%. The Chinese computer manufacturer Lenovo reported a big jump in quarterly revenue, sent its shares 19.75% higher in Hong Kong. That news also boosted some U.S. computer makers. Dell Technologies added 16.75%. H&P, no, just HP, accumulated 15.25% of 1%. Bonds rose yield on the 10-year T-note, fell 4.55%. You're listening to Marketplace.

this marketplace podcast is supported by viking committed to exploring the world in comfort journey through the heart of europe on an elegant viking longship with thoughtful service destination focused dining and cultural enrichment on board and on shore and every viking voyage is all-inclusive with no children and no casinos discover more at viking.com

this episode is sponsored by morgan stanley's thoughts on the market it can be difficult to stay up to date on the financial market in today's ever-changing environment with so much commentary at any given moment it's hard to cut through the noise to gain quality actionable insights morgan stanley is here to help with their podcast thoughts on the market thoughts on the market is your daily market snapshot covering trends across the global investment landscape and offering perspectives from Morgan Stanley's leading economists and strategists. It's one of the only daily podcasts providing real-time commentary from a financial institution on the day's biggest questions and topics. And with most episodes under five minutes long, market clarity can fit seamlessly into your daily routine. Staying informed has never been easier. Listen and subscribe to Thoughts on the Market on Spotify, Apple Podcasts, YouTube, or wherever you get your podcasts.

Bye.

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This is Marketplace. I'm Kai Rizdahl. Spotify announced a new feature this week. It's called Reserved. It's supposed to get more concert tickets into the hands of actual fans instead of scalpers who are going to sell them on the secondary and inevitably pricier market. But while some big-name arena tours are indeed selling out, there's a whole nother world of small independent music venues that are just trying to keep their doors open. A report from the National Independent Venue Association last year found almost two thirds of those clubs are not making any profit. Toby Parks owns a 250 person capacity venue in Des Moines, Iowa. It's called XBK Live. She's also the vice president of the National Independent Venue Foundation. Toby, welcome back to the program. It's good to have you on.

Yeah, thanks for having me, Kai.

How are things business-wise at XBK Live?

You know, we're very fortunate that we are doing quite well here in Des Moines, Iowa. But I can't say that that is necessarily the case for other independent venues across the country. It's been kind of a hard road post-pandemic for a number of reasons. But, you know, we're doing okay. We're hanging in there.

When you say you're doing okay, I mean, you know, are you sold out on a Friday, Saturday night?

I wish we were every Friday or Saturday night. But, you know, really the one of the big issues that we're facing is, you know, I think we in the independent sector are really trying to remake the connection with music fans. I think, you know, a lot of times due to the secondary ticket market and ticket scalpers, you know, people have gotten used to feeling like they're going to battle to get a ticket to see their favorite artist. So I think a lot of times they're not really thinking like, oh, I can spend 20 bucks and go to my local music venue in their own communities, in their own neighborhoods.

that's so interesting because it's not like and and this is i'm not saying this pejoratively i'm not saying it well at all but but it's not like your competition is uh like taylor swift right

and and those big stadium shows it actually is uh you would be surprised you know when people are you know in a position where they're paying literally hundreds or thousands of dollars for this one big concert they're not going and spending twenty dollars you know they're saving every dime that they can to go to this big concert. So that really is a huge part of some of the things that we're battling, is just trying to figure out where we fit in in people's entertainment budgets, if they have one. Yeah, that's a good point. Talk to me,

would you, about the sort of the macroeconomic environment, right? Inflation is up, consumers are cranky as they always are. Is that adding to your woes?

Yeah. I mean, it's, you know, when people are paying exorbitant gas prices, I mean, And that's hard not only from the venue perspective because there's less money in people's pockets. But I would say, you know, from the artist perspective, even, you know, there's a lot of concern about artists being able to afford to actually be able to go on tour. So, you know, we're fighting a lot of things on top of we as concert promoters and venue owners, you know, we make most of our money from concessions and people, you know, buying drinks at the bar. And there's a significant downturn in people drinking, like great for people being healthy, but it's really hard on the pocketbooks of small music venues.

It sounds – we started with me thinking you were doing all right, and now it sounds not great, honestly.

it's you know it's a battle every day and you know people who do this work you know those of us in the independent sector we don't do this because you know we think we're going to make tons of money we do it because we love our communities and we love helping develop artists you know there's no i always like to say there's no taylor swift without stages like mine you know and that's why we do it and um you know i'm fortunate enough that xbk isn't my primary source of income. Me, like, you know, every other person in America right now has multiple jobs,

so I can't complain. Well, let me take that side hustle turn you just gave me and talk about this other thing you do. You're an intellectual property attorney, right? I am. I am an IP

attorney and entertainment attorney and also have recently just started a new tech company. As we're talking about the economics of the live sector, you know, we as concert promoters and venue owners pay a lot of money into royalties to public performance societies. And so I've created some technology to help make it easier for artists to submit setlist data so they can participate in the royalty pools with their respective PROs.

Got it. So the people own the rights to the music.

Correct. They represent songwriters and own the rights to the underlying compositions. Yep.

Yeah. Interesting. So it's a side hustle, but it's very, very parallel, right?

It's 100 percent parallel. And I think that, you know, from the perspective of artists, as we said, it's so expensive for artists to tour these days. And, you know, we need we need those bands to be on tour to keep our doors open. So, you know, we're doing everything in our sector to help them.

Let me back you up a little bit to some of the things that you're dealing with. You mentioned people not drinking as much anymore, which great for society, maybe, you know, not as good for your profit margin. How else are you using this space? Because I imagine at 10 o'clock on a Tuesday morning, it's you got this space. You got to figure out how to use it. Forget just Saturday and Sunday night or Friday and Saturday nights. That's not going to do it for you.

Yeah. I mean, we've gotten really creative. You know, we do a lot of kid shows. You know, we'll open up on a Saturday morning and have bands that cater to kids. You know, we've really leaned in heavily to our NA beverage service. So, you know, we have a much broader range of non-alcoholic cocktails and things. And we also do a lot of community service work. So we work with a lot of local nonprofits to give them space. So instead of, you know, seeing your live concert, you might also be going to a yoga class.

Got to do what you got to do.

Yeah, exactly.

Toby Parks. She owns XBK Live. there in Des Moines, Iowa. Toby, thanks a lot. I appreciate your time. Thanks so much, Kai. Roughly one in three people in these United States, to the tune of $100 billion a year, participate in the birding industry. I know. I was surprised, too. But if you bought a bird feeder to watch the robins and the chickadees in the backyard, then you, too, are a bird watcher in the eyes of the U.S. Fish and Wildlife Service. And it turns out there is no better time to talk about birding than May, right in the thick of spring migration season, which, as it happens, is when Northwest Ohio hosts the aptly named Biggest Week in American Birding. Marketplace's Kaylee Wells went to see what's what.

Tanya Tice runs a seasonal ice cream stand called Barnside Creamery. She says she owes a lot of its success to bird watching, a hobby she doesn't really know much about at all. As their birding week festivities have come to be more known and have grown, so is our business right alongside of it. Her business is on a rural stretch of road about 25 miles east of Toledo. She's under a migratory flyway, and since she's a mile away from the Lake Erie shore, lots of birds stop around here before attempting to cross it. Which is why Northwest Ohio is home to the country's largest annual birdwatching festival. The week of this year's festival, temperatures were in the 50s, and it was cloudy, not traditional ice cream weather. But it's Tice's biggest week of the season, and the local businesses that supply her ingredients know it. When I call for my orders, they're like, oh, yep, it's birding week because Tanya just talked up. The biggest week in American Birding Festival brings more than $50 million to Northwest Ohio every year. hotels sell out months in advance people fly in from most u.s states and multiple countries and there's no shortage of gear to buy the conference center lobby is lined with booths of bird feeders and bird art and bird books and bird tours then there's the optics tent filled with binoculars and scopes and camera lenses worth more than my car that tent is run

by whitney lonfranco even just these festivals like the amount of volume we move i mean and there's more and more people starting birding every day. Birding had... A major moment thanks to COVID, obviously, because it's an outdoor, socially distanced activity and birds never stop doing their bird things. One popular phone app, eBird, saw engagement double going into the pandemic. Another one, Merlin, grew fivefold and a lot of newbies go out and buy binoculars.

We might have, again, those folks come in today and buy a $200 pair, but if they stick with it over the years, So continuously buy more equipment, go to cameras, go to spine scopes, upgrade their binoculars. It just, you know, keeps going.

So that's what birdwatchers are spending money on. But the why still eluded me. So I went on a tour. What's everybody staring at this time? There was a northern Perula. Okay.

It's a warbler. Okay. It's very colorful.

This tour consists of a few dozen people following behind a knowledgeable man in a matching yellow lanyard and ball cap, Occasionally stopping when they catch a glimpse in the brush that I definitely don't have the skill to spot. Rob Ritma, who runs one of the nature tour companies at the festival, lends me his very nice binoculars, which I learn require skill to use properly.

Yeah, but don't, you're moving your head to your, move the binoculars to your eyes, not your eyes to the binoculars.

Okay.

So keep your eyes on the bird.

Now I've lost it.

We'll try again.

An hour later, after more tries than I want to disclose, I finally spot what looks like a yellow ping-pong ball with wings. I see him. I did it. That's so exciting.

It is. Congratulations.

Greg Miller, who's leading the tour, is perhaps even more invested in my success than I am.

So people who haven't known about birding and then they saw a bird that actually converted them, they call it a spark bird.

Is that my spark bird?

This could be your spark bird if you start birding now because of this.

You have to tell me what kind of bird this is again.

This is Wilson's warbler.

My Sparkbird hasn't inspired me to drop $1,000 on binoculars, but I did hang a bird feeder in my yard. Or three. In Oak Harbor, Ohio, I'm Kaylee Wells for Marketplace.

This final note on the way out today, a pop quiz for the monetary policy aficionados among you. Kevin Warsh, now properly Chair Warsh, was sworn in at the White House this morning by Justice Clarence Thomas. But who do you suppose was the last Fed chair sworn in at the White House? And for bonus points, who did the swearing in? Anybody? Okay. Alan Greenspan, sworn in by Vice President George H.W. Bush in 1987. Alan Greenspan, by the way, a couple of months ago, turned 100 years old. Our theme music was composed by B.J. Liederman. Marketplace's executive producer is Nancy Farghali. Joanne Griffith is the Chief Content Officer. Neil Scarborough is the Vice President and General Manager. And I'm Kai Rizdahl. Have yourselves a great weekend, everybody. We'll see you back here on Monday, all right? This is 8 p.m.

Hey, it's Francis Lam, host of the Splendid Table podcast. Every week on our show, we celebrate the intersection of food and life. And this month, we're releasing a new series called Culinary Masters. It highlights some of the most iconic people in the food world. And we're revisiting conversations with people who have fundamentally changed how many of us cook and think about food. People like Jacques Pepin, Claudia Rodin, and Tony Bourdain, to name a few. You can listen to this special series now. Just search for The Splendid Table in your podcast app.