Lots More on Shohei Ohtani's $700 Million Contract

Neil Dutta, the top economist over at Renaissance Macro, has generally been sunny and optimistic about the economy over the last four years or so. But now he's warning of a possible mistake by the Federal Reserve. In his view, the central bank is waiting too long to get confirmation that inflation is coming back to target. Meanwhile, unemployment is starting to creep up in a meaningful way. As he sees it, if you're still worried about upside risk to inflation at this point, you need to have a theory about where that inflation is going to come from — and it's really hard to come up with an answer for that right now, given the general downward momentum in hiring and the overall economy. In this episode of Lots More, we catch up with Neil to talk about the risk that the Fed will blow the soft landing.

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 From cars to toys to clothes, we're just used to seeing the label "Made In China" on all sorts of things. But how did China become a go-to destination for manufactured goods in the first place? Who actually recognized that there was a huge opportunity to tap the abundant, low-cost labor to sell goods to Western consumers? On this episode of the podcast we speak with Elizabeth Ingleson, a professor at the London School of Economics and the author of the book Made in China: When US-China Interests Converged to Transform Global Trade. Ingleson traces the roots of the US-China trade relationship to a handful of US entrepreneurs in the early 1970s who first went into the country and recognized its opportunity as an export powerhouse. We discuss who these individuals were, the obstacles they had to overcome, and how they reshaped the entire global economy.

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The stock market has had a torrid run in 2024 despite the fact that interest rate cuts haven't materialized in the way people had expected at the start of the year. In fact, outside of a few blips here and there (like spring 2020), US stocks have been phenomenal performers for years. Tom Lee, the founder of Fundstrat and FS Insight has been bullish for a long time, having caught the correct side of this lengthy trend. On this episode, we speak to the former JPMorgan strategist about how he thinks about the market, what he sees happening right now in macro and demographic trends, and why he thinks it’s plausible that the market could roughly triple in the next six years.

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Everyone knows that the AI boom is built upon the voracious consumption of chips (largely sold by Nvidia) and electricity. And while the legacy cloud operators, like Amazon or Microsoft, are in this space, the nature of the computing shift is opening up new space for new players in the market. One of the hottest companies is CoreWeave, a company backed in part by Nvidia, which has grown its datacenter business massively. So how does their business actually work? How do they get energy? Where do they locate operations? How are they financed? What's the difference between a cloud AI and a legacy cloud? On this episode, we speak with CoreWeave's Chief Strategy Officer Brian Venturo about what it takes to build out operations at this scale.

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Virtually everyone, across the ideological spectrum, has the view right now that it's too hard to build things (or get things done generally) in America. New infrastructure is thwarted by red tape and permitting. New housing is thwarted by YIMBYism. Even something that doesn't require much new construction -- like NYC's attempt to impose congestion pricing -- is difficult to get done after years and years of wrangling. What is the core problem? And what can be done to address it? On this episode, we speak with John Arnold, who started his career as an energy trader at Enron, before going on to found a highly successful energy hedge fund. Now in his role as the co-founder of Arnold Ventures, he works on policy solutions to address these key bottlenecks. We discuss how he goes about philanthropy to affect policy change, the problems he's identified, and what solutions could be put in place to improve domestic development.

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Throughout history, financial markets have struggled with the issue of borders. Borders create friction, add cost and cause headaches for anyone who wants to spend money across them. On top of that, various national currencies can be wildly unstable.

Could a borderless, global currency ease friction and enhance financial inclusion and stability around the world? Cryptocurrencies offer an intriguing possible solution to money’s border problem. And a particular kind of cryptocurrency, called stablecoins, could become a powerful medium of exchange for international payments - and offer people around the world increased economic freedom.

This episode is sponsored by Coinbase.

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For much of this year, the S&P 500 has marched steadily higher while measures of stock market volatility, like the VIX, have stayed pretty low. But looking at the headline index only tells you part of the story. Beneath the surface of the S&P 500, individual stocks have been moving up and down a lot. And of course, traders have figured out a way to make money on the difference between the quiet overall index and all that volatility happening in individual stocks. This is the dispersion trade that's gotten quite a bit of attention in recent months. But figuring out exactly who's doing it and how pervasive it is isn't that easy. In this episode, we speak with Michael Purves, CEO and founder of Tallbacken Capital Advisors, and Josh Silva, managing partner and CIO at Passaic Partners, about this new volatility trade and what it means for the overall stock market.

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A few lucky people have made generational wealth trading the ups and downs of the crypto market. And some finance professionals have shifted gears to focus primarily on the space. But what is it like to actually trade these coins day-to-day? How do people pick which ones to buy? How do they analyze the coins themselves? How do they get reliable information? And what is it like, emotionally, to trade such an infamously volatile asset? On this episode of the Odd Lots podcast, we speak with Julian Malinak. In his day job, Julian works in healthcare tech. But the rest of the time, he's looking on message boards for the next 100-bagger. At one point he had made enough to retire on. And then it all went poof. But he keeps grinding and trying to improve his craft. Julian — who we found on the Odd Lots Discord server — explains what he does all day, and how the market really works from a trading perspective. 

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There's been a huge change in the market for nickel, which goes into everything from electric vehicles to steel. Indonesia has grown to absolutely dominate production and now provides more than 55% of the world's supply. A lot of that is going to China, which has partnered with Indonesia to help grow its nickel industry at a phenomenal rate. Now, there are accusations that low-grade and low-priced Indonesian nickel is flooding the global market, to the detriment of other producers. Western miners like BHP and Anglo American have been shuttering their own nickel operations, and have written them down by billions of dollars in recent years. On this episode, we speak with Michael Widmer, head of metals research at Bank of America, about the sea change that's taken place in the world's nickel market and what it says about the green energy transition, as well as the scramble for other strategically important metals. We also talk about all those bullish calls on copper, and general volatility in the metals space.

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The company that Elon Musk is most known for, obviously, is Tesla. It's been extraordinarily successful and made him one of the richest people in the world. But his true love may be SpaceX, the rocket company whose technology may one day be used in getting humans to Mars. But even if interplanetary trips are a long way off, there's no historical precedent for the sheer scale of the outer space dominance that Elon Musk has built out. Between his rockets and his satellite-based internet company Starlink, no one individual has ever completely dominated outer space this way. So where are these businesses going and how do they fit into the Elon empire? On this episode, we speak to three of our Bloomberg colleagues who have covered Musk and his businesses. First, we talk about the history and science of rockets with Bloomberg News reporter Ashlee Vance, the author of the book, When the Heavens Went on Sale: The Misfits and Geniuses Racing to Put Space Within Reach. Then we speak with Dana Hull and Max Chafkin, two of the hosts of Bloomberg's Elon Inc. podcast, about Musk's broader constellation of companies and how they all fit together.

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There are a bunch of historical analogies that people like to reach for in order to describe some of the economic trends we're seeing today. There's obviously the period of high inflation in the 1970s and early 1980s, or the disruptions caused by the Spanish Flu pandemic around 1918. But there's also a single year -- 1953 -- which not only contains some eerie similarities to today's economic environment, but also ended up having far-reaching consequences that reverberate all the way to 2022. On this episode, Josh Younger, JPMorgan's global head of asset and liability management research and strategy, tells the origin story of the decisions made in 1953 that helped create the vast repurchase or repo market. At a time when there are plenty of concerns over the stability of the market for US bonds, we go back in time to explore the reasons why repo exist at all.

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“There is a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation,” wrote Larry Summers in February 2021. A year later, the debate still rages over the first part of that sentence — the extent to which the American Rescue Plan is responsible for rising prices. But the rest of it is no longer in question: We’re currently experiencing the worst inflationary crisis in decades.

Annual inflation was already at its highest rate in decades in January of this year. But there was still a hopeful story you could tell about 2022: As the Covid pandemic eased, spending patterns would normalize, supply chains would strengthen, the labor market would stabilize, and inflation would ease. Then the Russian invasion of Ukraine sent global commodity markets into a tailspin and energy prices to record highs. An Omicron wave hit China, leading to huge lockdowns affecting global supply chains. And while the Fed has responded with the first of many planned interest rate hikes, it looks as though the inflation picture is only going to get worse in the immediate future.

For over a year now, Summers — a former U.S. Treasury secretary and current Harvard economist — has been warning about the economy that we appear to be entering. So I invited him to the show to make his case and paint a picture of what he thinks comes next. We discuss why he thinks we’re almost certainly headed toward a recession, why he believes the Fed is engaged in “wishful and delusional thinking,” whether corporations are using this inflationary period as an excuse to goose profit margins, how to avoid a 1970s-style stagflation crisis, whether interest rates are the right tool to be addressing inflation in the first place, why he thinks much more immigration is one of the best tools we have to bring down prices in the long term and much more.

Mentioned:

Larry Summers’s Mar. 17 Op-Ed in The Washington Post

Book Recommendations:

The Best and The Brightest by David Halberstam

The Price of Peace by Zachary D. Carter

Slouching Towards Utopia by J. Bradford DeLong

Thoughts? Guest suggestions? Email us at ezrakleinshow@nytimes.com.

You can find transcripts (posted midday) and more episodes of “The Ezra Klein Show” at nytimes.com/ezra-klein-podcast, and you can find Ezra on Twitter @ezraklein. Book recommendations from all our guests are listed at https://www.nytimes.com/article/ezra-klein-show-book-recs.

“The Ezra Klein Show” is produced by Annie Galvin, Jeff Geld and Rogé Karma; fact-checking by Andrea López-Cruzado; original music by Isaac Jones; mixing by Jeff Geld; audience strategy by Shannon Busta. Our executive producer is Irene Noguchi. Special thanks to Kristin Lin and Kristina Samulewski.

Your morning briefing. The news you need in just 15 minutes.
On today's podcast:

1) Fed Inclined Toward More Rate Hikes

2) Nvidia Jumps on Sales Forecast

3) Push for gender parity in Financial Industry

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Invest and trade better with CI Futures. Check your options: http://completeintel.com/pricing 

In this episode of “The Week Ahead,” host Tony Nash is joined by Brent Johnson, CEO of Santiago Capital, and Tracy Shuchart, a commodities trader at Hilltower Resource Advisors, to discuss the most pressing economic themes for the upcoming week.

One of the key topics of discussion is the Federal Reserve’s “Q2 Danger Zone,” which Brent believes could be a potentially scary time for the economy. He notes that we are still less than a year away from the first rate hike, and it often takes 12-18 months for rate hikes to show up in the economy. By the summer of 2022, we will be right in the heart of that time period, coinciding with YoY inflation numbers that should come down due to the crazy comparisons from the previous year. Brent warns that even if inflation remains somewhat sticky, we could see a bunch of disinflationary prints at the same time, which will make it challenging for the Fed. Moreover, by that time, Owner Equivalent Rents are expected to fall, adding to the Fed’s challenges.

Tracy then delves into the topic of oil production and cuts, specifically Russia’s decision to cut 500k barrels. She explains what this means for the market, how it could impact crude prices, and who will be hurt the most – Asia or the West. Tracy also raises an interesting point about Russia’s decision to smuggle oil through Albania despite the cuts, leaving us with questions about their motivations.

Finally, the discussion turns to commercial and industrial loan growth, which saw a sharp rise after rate hikes started. Tracy explores why this is happening, and what it means for the economy. She believes that companies are taking out loans to fund capital expenditures, which is good news for the economy as it indicates that businesses are investing in themselves and their future growth.

Key themes:
1. The Fed’s Q2 Danger Zone
2. Capex & C&I Loan Growth
3. 500k fewer Russian barrels

This is the 55th episode of The Week Ahead, where experts talk about the week that just happened and what will most likely happen in the coming week.

Follow The Week Ahead panel on Twitter:
Tony: https://twitter.com/TonyNashNerd
Brent: https://twitter.com/SantiagoAuFund
Tracy: https://twitter.com/chigrl

Watch this episode on Youtube: https://youtu.be/6I8vJ0ghm4g