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Speaker 1: Or has an effect on the economy. We'd be fools

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Speaker 1: if we said otherwise. Tony Katz, Tony Katz today, good

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Speaker 1: to be here, Good to be with you. And we're

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Speaker 1: seeing a lot of economic indicators that are coming out.

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Speaker 1: But some of these things are trailing indicators, means it

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Speaker 1: happened a month ago, or two.

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Speaker 2: Months ago or three months ago. It has nothing to do.

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Speaker 1: With what's happening with dropping bombs on Tehran right now.

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Speaker 1: And again, full disclosure in case you needed it. I'm

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Speaker 1: totally fine with taking out the Ayatola and I'm okay

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Speaker 1: with the ripples that take place for keeping Americans safe

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Speaker 1: long term if the regime is completely annihilated and destroyed.

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Speaker 1: But there have been some good data points, very helpful

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Speaker 1: data points to a guy running for reelection, Nope, not Trump,

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Speaker 1: Republicans running for reelection.

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Speaker 2: And Trump trying very hard not to be impeached for

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Speaker 2: a third time.

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Speaker 1: Doctor Matt Will joins me right now, economists at the

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Speaker 1: University of Indianapolis. Sir, There's a host of things that

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Speaker 1: are happening, and I want to get into it, especially

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Speaker 1: with this whole right payer protection pledge, which you are

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Speaker 1: very excited about. How manufacturing is ticking up for the

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Speaker 1: second month in a row.

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Speaker 2: But let's start with wars and the economy.

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Speaker 1: One can argue that historically war has been very good

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Speaker 1: for the economy. I don't think we look at what's

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Speaker 1: happening with Iran in that same kind of way.

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Speaker 2: Talk to me about what it.

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Speaker 1: Is you think America should expect or other nations should expect.

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Speaker 1: And is this a one month, is this a six month?

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Speaker 1: Does it depend on how long the bombing goes on?

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Speaker 2: What? Say you?

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Speaker 3: You know, it's interesting because wars are not positive for

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Speaker 3: the economy. What they do is they shift the economy.

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Speaker 3: So Trump deserves a lot of credit for actually doing

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Speaker 3: something that will cause some harm to the economy and

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Speaker 3: thus may potentially hurt him in the midterms, because what

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Speaker 3: you do is you shift your manufacturing, so you go

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Speaker 3: away from you know, it's like guns versus butter. You

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Speaker 3: go away from the butter back into the guns. So

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Speaker 3: right now, in fact, today they're meeting with people in

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Speaker 3: the defense industry. They're encouraging them to do more munitions

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Speaker 3: production because that's going to be the big issue, expanding

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Speaker 3: their production facilities in order to produce more product. They've

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Speaker 3: got to change their distribution and logistics on how they

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Speaker 3: distribute all these munitions and materials for the war effort,

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Speaker 3: and so that takes away from your private economy. It

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Speaker 3: happens we saw during COVID when we started taking GM

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Speaker 3: to make masks and ventilators. So it's not positive for

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Speaker 3: the economy, it shifts it. And Trump deserved credit for

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Speaker 3: doing biting the bullet and making a tough decision that's

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Speaker 3: not going to be the best economic decision, and I

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Speaker 3: do agree.

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Speaker 2: With that wholeheartedly.

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Speaker 1: The thing that we're hearing most about is supply line issues.

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Speaker 1: If you're getting pharmaceuticals from India, if you're getting other

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Speaker 1: products from Southeast Asia, if you're getting materials like fertilizers

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Speaker 1: from the Middle East, you now have issues with the

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Speaker 1: straits of our moods with ships and and how they're

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Speaker 1: going to travel and avoiding certain areas that creates supply

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Speaker 1: line issues. Is this already being seen, Is this something

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Speaker 1: that we should expect to see in the markets in

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Speaker 1: our pocketbooks in the months ahead, or can this be

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Speaker 1: easily stabilized.

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Speaker 3: It's it'll be easily stabilized as we get the shipping

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Speaker 3: lanes under control. Because some of the ships have already

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Speaker 3: been diverted down, you know, down through South Africa. That's

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Speaker 3: a much longer route, but it's going to be more

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Speaker 3: you know, it's going to get the goods there, so

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Speaker 3: it causes just a delay. We are very efficient in

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Speaker 3: adapting our supply chains to the current environment. And I

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Speaker 3: got to tell you, long term this is also good

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Speaker 3: because it's going to create more safety. You know that

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Speaker 3: ship that was sunk in the Indian Ocean. Have an

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Speaker 3: Iranian ship out there trying to disrupt things is not good.

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Speaker 3: You need escorts to take your ships through these various lanes. Well,

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Speaker 3: that ship is now gone. So again it's a short

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Speaker 3: term pain for long term gain. And I think Trump

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Speaker 3: is doing the right thing because it's going to long

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Speaker 3: term protect shipping lanes, distribution channels. The supply chain will

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Speaker 3: be safer. But in the short term there will be disruption.

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Speaker 3: That is absolutely happening.

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Speaker 1: Does the market is the market as you're seeing it right?

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Speaker 1: Sometimes it's it was down twelve hundred, but it only

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Speaker 1: closed four hundred down. Then it was up the next day,

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Speaker 1: and then as I last checked at midday today, it

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Speaker 1: was like down six hundred and that could be more

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Speaker 1: at this stage.

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Speaker 2: Who knows where it's going to end.

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Speaker 1: Does is the market trying to figure out how to

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Speaker 1: bake this in, how to figure out where where it's at,

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Speaker 1: or is this level of gesticulation based on something else.

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Speaker 3: It is the market is trying to bake in everything.

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Speaker 3: You know, we haven't talked about yet, productivity and you know,

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Speaker 3: the repayer protection pledge of data centers and the war

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Speaker 3: and the distribution channels. The market is just having a

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Speaker 3: challenge right now getting all this information and putting it

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Speaker 3: into the prices. But it's trying. It's trying very hard.

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Speaker 1: Well, let's get more into it, because you're making the

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Speaker 1: argument that it's not just war related. Talking to doctor

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Speaker 1: Matt Will, economists at the University of Indianapolis, data centers

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Speaker 1: and this rate payer protection pledge that the President spoke

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Speaker 1: about in the State of the Union, and you saw

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Speaker 1: him signing this executive order.

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Speaker 2: Yesterday, which has you all sorts of happy. This is

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Speaker 2: a giddy. This is not a doctor doom, Matt Will.

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Speaker 2: This is a doctor giddy. Matt Will.

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Speaker 1: What is it that you saw on data centers and

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Speaker 1: on this Trump pledge?

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Speaker 3: Well, I think I was the only person in the

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Speaker 3: world that stood up on that particular line when you

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Speaker 3: talked about, you know, data centers and making their own energy.

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Speaker 3: I think everybody else was sitting at that moment. I

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Speaker 3: love this because the problem we're having with data centers

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Speaker 3: is local utilities have a monopoly on selling energy. If

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Speaker 3: you're a data center in your city, you can't produce

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Speaker 3: your own energy. You have an agreement with the local

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Speaker 3: utility that bans you from doing that. And so this

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Speaker 3: sign this rate payer protection Pledge, which by the way,

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Speaker 3: that's the marquee, that's the pr But the thing behind

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Speaker 3: it is it allows the utility, the data centers to

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Speaker 3: make their own energy, and after they make their own energy,

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Speaker 3: they can then sell it back to the local utility.

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Speaker 3: This is this is revolutionary because we're going to have

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Speaker 3: a three to four hundred percent increase in demand for

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Speaker 3: electricity and there is no way the grid can handle it.

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Speaker 3: There's no way the local utilities can handle it. In fact,

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Speaker 3: Blackrock was so excited about the demand they bought a

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Speaker 3: company called AES But let me tell you, Blackrock is

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Speaker 3: no you know, you know, quiet person in the corner.

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Speaker 3: They go after aggressive returns because they thought they could squeeze,

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Speaker 3: you know, the industry for more money, and Trump just

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Speaker 3: put the brakes on that a little bit.

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Speaker 1: Well, the AES story is big where you and I

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Speaker 1: live in Indianapolis, because that is the power company here,

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Speaker 1: which used to be known as Indianapolis Power and Light.

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Speaker 1: And there's a real question about are the Katari's involved

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Speaker 1: in this? Is helpers which is the California pension system

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Speaker 1: involved in this? Maybe you don't want these groups having

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Speaker 1: any connection California Pension system for there are just incredible

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Speaker 1: levels of failures and problems and Qatar because I don't

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Speaker 1: want foreign nations connected to the power grid. But this

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Speaker 1: is really about the concept of SMRs, small modular reactors.

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Speaker 1: This is about the fact that data centers are here now.

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Speaker 1: Cities and states can ask whether or not they want

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Speaker 1: to be data center city or states, but they're coming

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Speaker 1: and they take power and they take water.

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Speaker 2: In the SMR, the small modular reactor.

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Speaker 1: Is about this ability to create power on a small

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Speaker 1: level its own generation, and I believe and I've talked

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Speaker 1: about how they should give it back to the city

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Speaker 1: and that's the incentive that states should demand in order

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Speaker 1: to bring in the data center.

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Speaker 2: Is did this.

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Speaker 1: Come because cities and towns have been pushing back against them.

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Speaker 1: Did this come because it's the smarter play because the

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Speaker 1: data center is a better investment overall. What I didn't

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Speaker 1: even know there would be an issue with the power

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Speaker 1: going back to a city or a town. So what

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Speaker 1: is the real impetus here for bringing this protection pledge about?

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Speaker 3: You know, I'm a conservative, I'm not a populist, but

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Speaker 3: it was populis in that cause. This because Trump saw

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Speaker 3: and we've seen in the area that we live, utility

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Speaker 3: rates doubling. That individual's utility bills are soaring, and this

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Speaker 3: is an attempt to address that problem. Because the utility

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Speaker 3: company loves that there's a demand. They love that there's

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Speaker 3: a shortage. This is how they make money. The utility

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Speaker 3: company is guaranteed a profit. It's actually about nine and

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Speaker 3: a half percent. So if they have an you know,

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Speaker 3: one hundred dollars of cost, they're allowed to charge one

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Speaker 3: hundred and nine. Well, guess what they want more cost?

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Speaker 3: They want the cost to go up because if their

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Speaker 3: cost go up to two hundred, they can then charge

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Speaker 3: two hundred and eighteen. That's doubling their profits. The local

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Speaker 3: energy companies love this. That's why Blackrock is in this

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Speaker 3: market now, that's why the Kataris want to buy our

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Speaker 3: energy and colpers. They know that their demand is huge.

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Speaker 3: So what did Trump do? Trump says, no, I'm going

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Speaker 3: to try to prevent it. So let me say everything

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Speaker 3: Trump did on this, his promise in the State of

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Speaker 3: the Union, trying to control what Blackrock is doing, the

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Speaker 3: fix that he put in place yesterday, these are phenomenal.

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Speaker 3: But he's going to have a problem. The utilities are

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Speaker 3: going to fight back, and they're going to fight back

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Speaker 3: hard because this was an executive order, it wasn't a law.

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Speaker 3: And I can tell you Blackrock spends a lot of

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Speaker 3: money on Congressman, yes.

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Speaker 2: And I don't say no to that.

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Speaker 1: But Blackrock is going to lose when Bernie Sanders and

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Speaker 1: Elizabeth Warren rally the Democrats to be in favor.

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Speaker 2: Of these kinds of things.

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Speaker 1: And that's the part that gives me a lot of

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Speaker 1: pause in that I don't know if I want to

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Speaker 1: be from a populous look telling people what they can

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Speaker 1: or cannot make. I if you believe you could say

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Speaker 1: certain nations can't be involved in businesses in the United States,

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Speaker 1: you can't own any utility. You cannot own lands near

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Speaker 1: a military basis. I would allow the communist Chinese to

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Speaker 1: own anything in the United States. I believe that is

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Speaker 1: a national security conversation can be engaged. But if we're

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Speaker 1: saying that this is populism and non conservatism, I go

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Speaker 1: back and look at this and say, this is the

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Speaker 1: kind of price fixing that an Elizabeth Warren and a

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Speaker 1: Bernie Sanders are going to love.

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Speaker 3: Don't ask me to love that. It's not price fixing.

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Speaker 3: It's the opposite. What Trump is trying to do is

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Speaker 3: stop the price fixing because right now the utility companies

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Speaker 3: are allowed to fix prices. They have a monopoly. The

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Speaker 3: only reason in Bernie and Warren are on board here

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Speaker 3: is because they just hate anything business. So they hate Blackrock,

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Speaker 3: they hate the utility companies. I don't hate either one

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Speaker 3: of them. I can tell you I personally have investments

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Speaker 3: through Blackrock. I'm not against Blackrock. What I am in

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Speaker 3: favor of is more competition, taking the handcuffs off the

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Speaker 3: local data center and saying you can produce your own energy.

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Speaker 3: That's not government controlling prices. That's more free market, that's

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Speaker 3: more capitalism. Huge fan, Let them produce their own energy.

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Speaker 3: Stop these regulations that ban them from producing their own energy,

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Speaker 3: and that's what Trump is doing. I don't know that

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Speaker 3: those two folks are going to be on board though.

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Speaker 3: Remember it's Trump's idea. So if it's Trump's idea, they

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Speaker 3: may be totally against it.

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Speaker 1: It'd be interesting to see them say we're opposed to

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Speaker 1: lower energy rates when they complain about energy rates. But

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Speaker 1: if it is plays out as you're discussing it and

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Speaker 1: it is a capitalist response, they'll absolutely be opposed to it.

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Speaker 1: Talking to doctor Matt Will, economist at the University of Indianapolis,

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Speaker 1: you've brought up productivity a couple of times.

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Speaker 2: Productivity is up. You're a happy man.

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Speaker 3: Oh my gosh, this is where Trump needs to go

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Speaker 3: get a megaphone, which I know he has plenty of those,

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Speaker 3: and he should brag about this. So it was up

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Speaker 3: two point eight last quarter. Now you're thinking, oh, okay,

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Speaker 3: that's good. That's not great. That's despite the government shutdown.

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Speaker 3: This is a government shutdown impacted number. And we always

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Speaker 3: ignore the revisions. Let's not the third quarter revision. Productivity

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Speaker 3: was up five point two percent Q two, up four

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Speaker 3: point two Tony, I look back in history, I couldn't

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Speaker 3: find five point two increase percent in productivity going back

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Speaker 3: fifty years. The productivity is up because Trump is hitting

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Speaker 3: on all cylinders on deregulation, on taxes, on the one

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Speaker 3: big beautiful bill. He's doing everything again. It's like this,

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Speaker 3: you know, it's like this energy deal. It's not hot

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Speaker 3: and sexy, it's not making headlines. But man, is it

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Speaker 3: helping the economy.

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Speaker 1: And with that productivity you see manufacturing is up as

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Speaker 1: well for the second month in a row.

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Speaker 3: Wow. Okay, you know me, I've been talking. Everyone says, oh,

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Speaker 3: doom and gloom, doctor will doom and gloom. Yeah, because

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Speaker 3: our manufacturing base has been shrinking since the Liberation Day

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Speaker 3: in April. The last two months. I'm so happy. Remember

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Speaker 3: we talked about this last month. Is it a trend?

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Speaker 3: It's a trend. We got two months and these wasn't

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Speaker 3: a small increase. Manufacturing in the United States expanded at

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Speaker 3: a four point eight percent rate last month. Wow, this

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Speaker 3: is good news. So the manufacturing is back. I was

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Speaker 3: so nervous because we had a multi year decline in

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Speaker 3: manufacturing and now we're back. Good for the economy, good

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Speaker 3: for Trump and the things he's done to help that happen.

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Speaker 1: And you don't think what we're engaged in right now

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Speaker 1: in Iran takes away from that. Do you think that

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Speaker 1: these things can still climb even if it does take

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Speaker 1: this five weeks plus that the President has indicated.

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Speaker 3: It will cause a decline. No, no, decline. It's going

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Speaker 3: to cause a slowdown. Think of it as a tap

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Speaker 3: on the brakes instead of stopping the car. It is

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Speaker 3: definitely going to be a tap on the brakes. We're

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Speaker 3: definitely going to see some economic pullback from this, but

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Speaker 3: I don't think it's going to counterbalance all this positive

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Speaker 3: energy that's happening.

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Speaker 1: Doctor Matt Well, Economy at the University of Indianapolis. I

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Speaker 1: appreciate you taking the time to be with us, more

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Speaker 1: to get to I'm Tony Katz than this is Tony

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Speaker 1: Katz today