1 00:00:05,160 --> 00:00:10,480 Speaker 1: Line from the Heartbad and the Crossroads of America. 2 00:00:10,520 --> 00:00:11,960 Speaker 2: It's Tony Katz today. 3 00:00:12,680 --> 00:00:15,600 Speaker 1: So the inflation number that came out today, this PPI 4 00:00:15,800 --> 00:00:18,639 Speaker 1: number is an absolutely miserable number, but it's not the 5 00:00:18,720 --> 00:00:21,560 Speaker 1: end of the world. Although it is a reminder to 6 00:00:21,680 --> 00:00:24,759 Speaker 1: Secretary Besson, to President Trump, to the administration, and to 7 00:00:24,840 --> 00:00:28,880 Speaker 1: all the so called influencers. Stop saying inflation is done. 8 00:00:29,440 --> 00:00:33,920 Speaker 1: Stop saying it's solved. You sound crazy and you put 9 00:00:33,960 --> 00:00:37,320 Speaker 1: yourself in a position of looking the fool when. 10 00:00:37,080 --> 00:00:38,680 Speaker 2: You get bad reports like this. 11 00:00:38,880 --> 00:00:41,800 Speaker 1: Tony Katz, Tony Katz today, Good to be here, Good 12 00:00:41,880 --> 00:00:42,840 Speaker 1: to be with you. 13 00:00:43,840 --> 00:00:47,120 Speaker 2: There's this report to discuss, which, again, not the end 14 00:00:47,120 --> 00:00:48,800 Speaker 2: of the world. Everyone needs to relax. 15 00:00:49,080 --> 00:00:51,239 Speaker 1: It's just not a good report. There's a lot in 16 00:00:51,280 --> 00:00:53,360 Speaker 1: it that we need to break down. But you don't 17 00:00:53,360 --> 00:00:55,000 Speaker 1: think you can have a better report next month. 18 00:00:55,680 --> 00:00:56,600 Speaker 2: That's my point. 19 00:00:57,320 --> 00:00:59,840 Speaker 1: If you act like everything is solved and then you 20 00:01:00,280 --> 00:01:02,680 Speaker 1: something that shows it's not solved, you look like a liar. 21 00:01:02,720 --> 00:01:05,160 Speaker 2: But you don't need to do that. Just don't look 22 00:01:05,200 --> 00:01:05,880 Speaker 2: that way. 23 00:01:06,640 --> 00:01:10,119 Speaker 1: Meanwhile, you see mortgage rates that are down below six percent, 24 00:01:10,160 --> 00:01:12,200 Speaker 1: You're like, well, what in the world is happening here? 25 00:01:12,240 --> 00:01:15,400 Speaker 1: The ten year treasury is below four percent? Isn't that 26 00:01:15,440 --> 00:01:18,720 Speaker 1: good news? And what in the world was Secretary bestn't 27 00:01:18,760 --> 00:01:22,679 Speaker 1: talking about when he talks about trueflation? And you heard 28 00:01:22,720 --> 00:01:25,040 Speaker 1: President Trump this stay of the Union echo this same line, 29 00:01:25,080 --> 00:01:25,959 Speaker 1: inflation down. 30 00:01:25,840 --> 00:01:28,800 Speaker 2: To one point seven percent? Where does that come from? 31 00:01:28,880 --> 00:01:32,920 Speaker 1: Doctor Mattwell joins this economist at the University of Indianapolis. 32 00:01:32,959 --> 00:01:36,119 Speaker 1: I want to talk about these core wholesale prices where 33 00:01:36,200 --> 00:01:39,479 Speaker 1: the PPI, the producer Price index, is at going upero 34 00:01:39,480 --> 00:01:42,920 Speaker 1: point five percent. Now, I'm gonna warn you, sir, there 35 00:01:42,959 --> 00:01:44,760 Speaker 1: are people who listen to you and love what you 36 00:01:44,840 --> 00:01:46,760 Speaker 1: have to say because I think it's very interesting. There's 37 00:01:46,800 --> 00:01:49,680 Speaker 1: some people who think that you're mister doom and gloom 38 00:01:50,200 --> 00:01:54,640 Speaker 1: anything Trump you're negative about and it's always about this 39 00:01:54,680 --> 00:01:57,639 Speaker 1: is wrong and that is wrong, and you're never ever happy. 40 00:01:57,680 --> 00:02:00,000 Speaker 1: So I just want you to know you can please 41 00:02:00,160 --> 00:02:01,920 Speaker 1: in no way. Can you please one hundred percent of 42 00:02:01,960 --> 00:02:05,080 Speaker 1: the people. It's impossible. You don't have that capacity. None 43 00:02:05,080 --> 00:02:08,040 Speaker 1: of us do break down these numbers. 44 00:02:08,120 --> 00:02:09,600 Speaker 2: Here. What does the. 45 00:02:09,600 --> 00:02:13,000 Speaker 1: Report say, Let's start there. What is this report, this 46 00:02:13,120 --> 00:02:15,079 Speaker 1: producer Price Index report telling us? 47 00:02:16,280 --> 00:02:19,040 Speaker 3: Okay, well, I can promise you I will again not 48 00:02:19,160 --> 00:02:21,960 Speaker 3: be elected to office because I will offend everybody in 49 00:02:21,960 --> 00:02:24,839 Speaker 3: my comments. If you love Trump, you hate Trump either way. 50 00:02:25,840 --> 00:02:29,000 Speaker 3: The report's terrible. Okay, it is not a good report. 51 00:02:29,080 --> 00:02:31,680 Speaker 3: But everyone needs to take a deep breath because the 52 00:02:31,760 --> 00:02:35,240 Speaker 3: report is now forty five days old. The data in 53 00:02:35,320 --> 00:02:38,760 Speaker 3: the PPI report is from forty five days ago, and 54 00:02:38,840 --> 00:02:41,160 Speaker 3: since then we've had a Supreme Court ruling that said 55 00:02:41,440 --> 00:02:44,520 Speaker 3: tariffs no longer are allowed. Well, of course there's going 56 00:02:44,600 --> 00:02:47,639 Speaker 3: to be a different version of them. So in the report, 57 00:02:48,000 --> 00:02:50,960 Speaker 3: the report says point five for January, so that's six 58 00:02:51,000 --> 00:02:54,959 Speaker 3: percent annualized. That is a terrible number. The market will 59 00:02:54,960 --> 00:02:57,360 Speaker 3: not like this number. The market will go crazy for 60 00:02:57,440 --> 00:02:59,799 Speaker 3: this number. I expect the market to write out of 61 00:02:59,840 --> 00:03:04,560 Speaker 3: the drop because of this number. However, if you look 62 00:03:04,600 --> 00:03:07,680 Speaker 3: into it, there are some bad parts and some good parts, okay. 63 00:03:07,680 --> 00:03:10,600 Speaker 3: For example, the core is point three point three is 64 00:03:10,639 --> 00:03:13,359 Speaker 3: three point six, so okay, it's not as bad as 65 00:03:13,360 --> 00:03:17,560 Speaker 3: the overall core. Of course, removes energy and food, so 66 00:03:17,639 --> 00:03:21,799 Speaker 3: that's a good thing. On the bad side, again, CNBC 67 00:03:22,080 --> 00:03:25,359 Speaker 3: pulled the headline there's one number in here. Final demand 68 00:03:25,520 --> 00:03:30,520 Speaker 3: was point eight. That's off the charts, a high number, 69 00:03:30,840 --> 00:03:33,440 Speaker 3: but that's one little number they extracted from the middle 70 00:03:33,480 --> 00:03:36,520 Speaker 3: of the reports. I'm not too worried about that. It's 71 00:03:36,720 --> 00:03:39,480 Speaker 3: not a good number now on the good side or 72 00:03:39,560 --> 00:03:44,240 Speaker 3: bad side. The producers don't always pass us along to us. 73 00:03:44,520 --> 00:03:46,440 Speaker 3: They've been eating a lot of it. Now they can't 74 00:03:46,480 --> 00:03:49,040 Speaker 3: eat it forever. They cannot eat These terrorists costs for 75 00:03:49,080 --> 00:03:51,880 Speaker 3: all eternity, but they don't always pass it all along. 76 00:03:51,920 --> 00:03:55,360 Speaker 3: We know the CPI is lower than the PPI, so 77 00:03:55,400 --> 00:03:59,280 Speaker 3: the wholesaler is paying more. We paying a little bit more. 78 00:04:00,080 --> 00:04:03,240 Speaker 3: But it's all forty five days old, and the tariffs 79 00:04:03,240 --> 00:04:06,240 Speaker 3: have now been rejected by the Supreme Court. So I 80 00:04:06,400 --> 00:04:10,480 Speaker 3: anticipate next month that this report will be better for 81 00:04:10,560 --> 00:04:15,360 Speaker 3: two reasons. One, the tariffs are now being eliminated, of course, 82 00:04:15,400 --> 00:04:19,479 Speaker 3: replaced by something lower. And second, the economy seems to 83 00:04:19,520 --> 00:04:22,240 Speaker 3: be doing good despite this GDP report we just saw. 84 00:04:23,040 --> 00:04:25,240 Speaker 3: Despite that, I think, I mean you're to see if 85 00:04:25,240 --> 00:04:27,120 Speaker 3: that's a trend. I think we talked about it. There's 86 00:04:27,120 --> 00:04:30,320 Speaker 3: some anomalies in there that we can grow ourselves out 87 00:04:30,360 --> 00:04:33,839 Speaker 3: of inflation, and I'm optimistic that the things that Trump 88 00:04:33,839 --> 00:04:36,400 Speaker 3: has put in place will grow us out of the inflation. 89 00:04:37,440 --> 00:04:39,080 Speaker 2: So let's do a couple of things here. 90 00:04:39,120 --> 00:04:43,520 Speaker 1: The GDP was down, and President Trump did allude to 91 00:04:43,520 --> 00:04:44,520 Speaker 1: this in the State of the Union. 92 00:04:44,520 --> 00:04:45,560 Speaker 2: You've disgusted here. 93 00:04:45,760 --> 00:04:48,040 Speaker 1: You have a government shutdown for forty five days, You're 94 00:04:48,080 --> 00:04:50,080 Speaker 1: going to have a smaller GDP number. 95 00:04:50,760 --> 00:04:51,919 Speaker 2: That's just the way it's going to go. 96 00:04:52,000 --> 00:04:54,760 Speaker 1: So when we talked about the shutdown in October November 97 00:04:55,040 --> 00:04:57,960 Speaker 1: that led to the smaller fourth quarter GDP, we now 98 00:04:57,960 --> 00:05:00,760 Speaker 1: have a smaller shutdown going on with the Department of 99 00:05:00,800 --> 00:05:03,520 Speaker 1: Homeland Security, which seems to have no end in sight. 100 00:05:04,480 --> 00:05:07,160 Speaker 1: But this idea that you know, the producers or everyone's 101 00:05:07,320 --> 00:05:09,440 Speaker 1: the businesses are going to keep absorbing the tariffs has 102 00:05:09,440 --> 00:05:10,000 Speaker 1: been a lot of talk. 103 00:05:10,040 --> 00:05:11,000 Speaker 2: Wall Streetjournal has been. 104 00:05:10,960 --> 00:05:14,200 Speaker 1: Big on this, that those days are over, they can't 105 00:05:14,240 --> 00:05:18,039 Speaker 1: absorb any more. But you mentioned that this report is 106 00:05:18,040 --> 00:05:20,880 Speaker 1: from forty five days ago. Is that because of shutdown 107 00:05:21,160 --> 00:05:23,320 Speaker 1: that were only getting this report now? And if it 108 00:05:23,360 --> 00:05:26,159 Speaker 1: is indeed forty five days ago, why would anybody be 109 00:05:26,200 --> 00:05:29,400 Speaker 1: reacting negatively to it today? 110 00:05:29,480 --> 00:05:32,840 Speaker 3: Well, that's a great question. Every report is forty five 111 00:05:32,920 --> 00:05:35,280 Speaker 3: days old because we're getting it now at the end 112 00:05:35,320 --> 00:05:38,960 Speaker 3: of February, and it's for January data, which the average 113 00:05:39,000 --> 00:05:43,440 Speaker 3: of January. Of course, January fifteenth, so they're tracking data 114 00:05:43,760 --> 00:05:46,679 Speaker 3: that's forty five days ago, so it's not real time. 115 00:05:46,800 --> 00:05:50,200 Speaker 3: Every report from the government has that lag. The worst 116 00:05:50,520 --> 00:05:53,120 Speaker 3: lag is in the unemployment report, the second worst is 117 00:05:53,120 --> 00:05:56,400 Speaker 3: in the GDP, and the third worst is in the 118 00:05:56,400 --> 00:06:00,360 Speaker 3: inflation report. So this is inflation from middle of January, 119 00:06:00,600 --> 00:06:04,200 Speaker 3: not from today. And that kind of gets us to 120 00:06:04,240 --> 00:06:06,200 Speaker 3: this other topic you mentioned, which is true relation. 121 00:06:07,680 --> 00:06:10,520 Speaker 1: Talking to doctor Matt Will, economist at the University of 122 00:06:10,560 --> 00:06:15,080 Speaker 1: Indianapolis before we get to the trueflation conversation, so the 123 00:06:15,120 --> 00:06:17,000 Speaker 1: fact that it's forty five days old, if every report 124 00:06:17,080 --> 00:06:18,919 Speaker 1: is forty five days old, I don't have to consider 125 00:06:18,960 --> 00:06:22,599 Speaker 1: that in my conversation piece. This is when reports come out. 126 00:06:23,560 --> 00:06:26,120 Speaker 1: Market reaction, as we talked. 127 00:06:26,240 --> 00:06:28,840 Speaker 2: In the futures who knows where things are going to end? 128 00:06:28,920 --> 00:06:32,599 Speaker 1: Was immediately down and down five hundred, but markets have 129 00:06:32,600 --> 00:06:35,960 Speaker 1: a tendency to react and then correct react it then 130 00:06:36,040 --> 00:06:39,480 Speaker 1: say okay, that was over. Who is looking at this 131 00:06:39,600 --> 00:06:42,680 Speaker 1: report and what is it that they are seeing that 132 00:06:42,720 --> 00:06:44,840 Speaker 1: could lead them to Okay, this is going to be 133 00:06:44,880 --> 00:06:47,240 Speaker 1: a bad few days, or maybe this is glad it's 134 00:06:47,279 --> 00:06:50,480 Speaker 1: come out on a Friday. People will forget by a Monday. 135 00:06:51,000 --> 00:06:53,039 Speaker 1: Who are the people who are most reacting to this 136 00:06:53,160 --> 00:06:53,839 Speaker 1: kind of reporting. 137 00:06:54,920 --> 00:06:58,839 Speaker 3: Okay, well, first everybody's reacting to it. But then let 138 00:06:58,920 --> 00:07:00,680 Speaker 3: me say we can't ignore it. Like you said at 139 00:07:00,680 --> 00:07:03,719 Speaker 3: the beginning of your question, is it is the data 140 00:07:03,800 --> 00:07:06,880 Speaker 3: we have. Would we like instantaneous data? Of course, who 141 00:07:06,880 --> 00:07:09,640 Speaker 3: would like instantaneous data? But this is all we've got, 142 00:07:09,800 --> 00:07:12,040 Speaker 3: and they're very careful about how they release it so 143 00:07:12,080 --> 00:07:15,480 Speaker 3: it doesn't leak out. But everybody's looking at it. That's 144 00:07:15,520 --> 00:07:18,280 Speaker 3: in the market. We need data, and this is the 145 00:07:18,280 --> 00:07:20,720 Speaker 3: best data that we've got. I'm not saying it's perfect. 146 00:07:20,760 --> 00:07:24,120 Speaker 3: It's very flawed. I could give you the flaws. You know, 147 00:07:24,160 --> 00:07:26,440 Speaker 3: there's a lot of estimates in here. The government is 148 00:07:26,480 --> 00:07:28,760 Speaker 3: notorious for estimates. One of the reasons I was a 149 00:07:28,800 --> 00:07:31,120 Speaker 3: big fan of EJ getting his job at the BLS, 150 00:07:31,160 --> 00:07:33,440 Speaker 3: which didn't happen, is because he was going to fix 151 00:07:33,440 --> 00:07:36,720 Speaker 3: a lot of these problems. As flawed as it is, 152 00:07:37,240 --> 00:07:39,960 Speaker 3: it's the best data we have. So everyone in the 153 00:07:40,000 --> 00:07:43,880 Speaker 3: market uses it now, I say everyone, But people are 154 00:07:43,880 --> 00:07:47,320 Speaker 3: always looking for better data, and there might be better 155 00:07:47,440 --> 00:07:48,200 Speaker 3: data out there. 156 00:07:49,360 --> 00:07:52,400 Speaker 1: EJ refers to EJ Antoni over a Heritage foundation who 157 00:07:52,440 --> 00:07:55,360 Speaker 1: was up for a job with the Trump administration that 158 00:07:55,400 --> 00:08:00,520 Speaker 1: did not come to pass. There was a little of, hey, 159 00:08:00,640 --> 00:08:02,600 Speaker 1: let's go on the attack on him. There was a 160 00:08:02,640 --> 00:08:04,800 Speaker 1: little bit of maybe there were better ways for him 161 00:08:04,800 --> 00:08:06,200 Speaker 1: to navigate the situation. 162 00:08:06,400 --> 00:08:07,440 Speaker 2: However it happened. 163 00:08:07,480 --> 00:08:10,320 Speaker 1: We still utilize him on the show for his mind 164 00:08:10,040 --> 00:08:13,080 Speaker 1: and work through some of the other issues. He's one 165 00:08:13,120 --> 00:08:15,200 Speaker 1: of two people at Heritage that I still speak to. 166 00:08:15,280 --> 00:08:17,800 Speaker 1: They've got their own issues over there which are all 167 00:08:17,880 --> 00:08:20,000 Speaker 1: Kevin Roberts' fault, and he has to be. 168 00:08:19,960 --> 00:08:20,960 Speaker 2: Able to work that one out. 169 00:08:21,000 --> 00:08:23,960 Speaker 1: That was a little longer of an explanation than maybe 170 00:08:23,960 --> 00:08:25,680 Speaker 1: some people needed, but we'll have to make sure I 171 00:08:25,720 --> 00:08:27,720 Speaker 1: got it all out there. Talking to doctor Matt Will, 172 00:08:28,080 --> 00:08:34,160 Speaker 1: economist at the University of Indianapolis. If you're advising Donald Trump, 173 00:08:34,200 --> 00:08:39,160 Speaker 1: if you're advising Scott bessim regarding this report, my argument has. 174 00:08:39,080 --> 00:08:41,320 Speaker 2: Been stopped telling you that inflation is handled, it's not. 175 00:08:41,720 --> 00:08:44,640 Speaker 1: The whole influencer class is a bunch of ridiculous people 176 00:08:44,840 --> 00:08:48,480 Speaker 1: who aren't doing the administration, and he favors whatsoever. But 177 00:08:48,600 --> 00:08:51,040 Speaker 1: if you're advising them, how do you advise them to 178 00:08:51,520 --> 00:08:54,920 Speaker 1: a discuss this and then be handle this going forward. 179 00:08:56,120 --> 00:08:58,040 Speaker 3: Well, I think you've been saying this for the last 180 00:08:58,120 --> 00:09:01,240 Speaker 3: few weeks. Is they can't keep saying is gone. They 181 00:09:01,280 --> 00:09:04,760 Speaker 3: have to admit the truth and say it's here. And 182 00:09:04,800 --> 00:09:07,040 Speaker 3: then they need to tout, well, we're going to grow 183 00:09:07,080 --> 00:09:09,240 Speaker 3: ourselves out of this. And then they start looking at 184 00:09:09,280 --> 00:09:12,120 Speaker 3: all the good things that they have done concerning deregulation, 185 00:09:12,480 --> 00:09:16,719 Speaker 3: lower taxes, bonus appreciation. You know this year, the no 186 00:09:16,840 --> 00:09:19,120 Speaker 3: tax on tips and no tax on social security, all 187 00:09:19,240 --> 00:09:22,920 Speaker 3: those things that will grow the economy. We say, okay, people, 188 00:09:23,440 --> 00:09:26,880 Speaker 3: we see and we feel your pain. But the economy 189 00:09:26,920 --> 00:09:29,400 Speaker 3: is moving in the right direction. The ship is turning. 190 00:09:30,080 --> 00:09:32,520 Speaker 3: Stick with us, it'll get there. I think they just 191 00:09:32,559 --> 00:09:34,960 Speaker 3: have to be honest and tout the good things, but 192 00:09:35,120 --> 00:09:38,160 Speaker 3: admit the bad things. Don't be afraid to admit what 193 00:09:38,240 --> 00:09:40,120 Speaker 3: everybody can see right in front of their face. 194 00:09:40,800 --> 00:09:43,520 Speaker 1: That brings us to this concept of trueflation. It is 195 00:09:43,640 --> 00:09:46,840 Speaker 1: something that Scott Bessen, the Treasure is Secretary, brought up 196 00:09:46,840 --> 00:09:48,360 Speaker 1: a couple of weeks ago, and I said, you know, 197 00:09:48,400 --> 00:09:51,360 Speaker 1: I do this for a living, and I don't often hear, 198 00:09:51,720 --> 00:09:55,600 Speaker 1: if ever heard anybody actually discuss the idea of true inflation, 199 00:09:56,280 --> 00:10:00,240 Speaker 1: the idea that inflation is below one percent. And you 200 00:10:00,280 --> 00:10:03,720 Speaker 1: heard him bring up at that one point seven percent 201 00:10:03,840 --> 00:10:07,080 Speaker 1: number at the State of the Union. Talk to me 202 00:10:07,120 --> 00:10:10,719 Speaker 1: about what trueflation is, what Scott Besant is after. 203 00:10:10,559 --> 00:10:12,760 Speaker 2: And whether or not they've got an argument that can 204 00:10:12,800 --> 00:10:13,400 Speaker 2: really be made. 205 00:10:14,800 --> 00:10:17,720 Speaker 3: So this is interesting. I'll admit when he said that, 206 00:10:18,280 --> 00:10:20,240 Speaker 3: I didn't understand. I thought he was referring to an 207 00:10:20,400 --> 00:10:23,520 Speaker 3: MIT report. But then I've done a lot of research 208 00:10:23,600 --> 00:10:26,960 Speaker 3: since then. Trueflation is the name of a company, So 209 00:10:27,480 --> 00:10:29,040 Speaker 3: that's one thing right out of the gate. And they 210 00:10:29,040 --> 00:10:32,440 Speaker 3: have a product which they call the Trueflation Stream Network, 211 00:10:32,480 --> 00:10:35,240 Speaker 3: and a thing called data as Anyway, they've got this 212 00:10:35,360 --> 00:10:38,040 Speaker 3: product that they sell which is supposed to be real 213 00:10:38,160 --> 00:10:43,040 Speaker 3: time inflation, not forty five days old, but instantaneous. It's 214 00:10:43,080 --> 00:10:46,480 Speaker 3: a private company. It's proprietary. But what we do know 215 00:10:46,600 --> 00:10:49,239 Speaker 3: about it is what they do is they take thirteen 216 00:10:49,320 --> 00:10:52,800 Speaker 3: million items that they pull from the Internet. They use 217 00:10:52,840 --> 00:10:56,199 Speaker 3: APIs and go into things like Amazon and Zillo and 218 00:10:56,360 --> 00:10:58,480 Speaker 3: you know, you name it. They go to these places 219 00:10:58,520 --> 00:11:01,920 Speaker 3: and they look up the data to real time every 220 00:11:02,040 --> 00:11:05,840 Speaker 3: single day and they get at least three verified sources 221 00:11:05,880 --> 00:11:09,040 Speaker 3: for something, so like you your chocolate and milk or 222 00:11:09,080 --> 00:11:12,640 Speaker 3: your car, or you know, you're buying a washing machine. 223 00:11:12,720 --> 00:11:16,400 Speaker 3: So they're looking at real data in real time and 224 00:11:16,440 --> 00:11:20,679 Speaker 3: they're grabbing it thirteen million, so much much bigger than 225 00:11:20,720 --> 00:11:23,640 Speaker 3: what the government uses in their basket of goods. They 226 00:11:23,720 --> 00:11:27,520 Speaker 3: then aggregate this and they keep it secure because that's 227 00:11:27,520 --> 00:11:30,280 Speaker 3: one of the things. Do you and I trust the data? 228 00:11:30,679 --> 00:11:33,839 Speaker 3: And remember they're selling this, they're selling the information and 229 00:11:33,880 --> 00:11:35,920 Speaker 3: they have a pretty good customer base. They're selling it 230 00:11:35,960 --> 00:11:40,080 Speaker 3: to financial institutions to set mortgage rates. They're selling it 231 00:11:40,120 --> 00:11:42,800 Speaker 3: to insurance companies so that they know how to price 232 00:11:42,840 --> 00:11:45,679 Speaker 3: their products. Because a lot of products that you and 233 00:11:45,720 --> 00:11:50,800 Speaker 3: I buy and financial institutions sell have inflation baked in 234 00:11:50,840 --> 00:11:54,000 Speaker 3: the price. So these companies want to know what is 235 00:11:54,040 --> 00:11:57,760 Speaker 3: the real price right now if I'm selling you something today. 236 00:11:58,520 --> 00:12:00,880 Speaker 3: And so what they use is block you know, that's 237 00:12:00,920 --> 00:12:04,560 Speaker 3: the thing behind crypto right to say our data is honest, 238 00:12:04,600 --> 00:12:07,880 Speaker 3: it's secure. No one can steal or cheat or manipulate 239 00:12:07,920 --> 00:12:11,199 Speaker 3: our data. So they gather the data through the web, 240 00:12:11,800 --> 00:12:15,400 Speaker 3: they transmit it securely. I'm using air quotes for that, 241 00:12:16,280 --> 00:12:19,520 Speaker 3: and they claim it's real time. They say every day 242 00:12:20,320 --> 00:12:24,920 Speaker 3: they can give you today's right now inflation and the 243 00:12:24,960 --> 00:12:27,240 Speaker 3: only question is how accurate is it? And I've done 244 00:12:27,240 --> 00:12:28,559 Speaker 3: a little bit of work on that as well. 245 00:12:28,800 --> 00:12:32,400 Speaker 1: What's interesting about this is that I'm hearing this for 246 00:12:32,440 --> 00:12:33,760 Speaker 1: the first time. A lot of people are hearing this 247 00:12:33,800 --> 00:12:35,960 Speaker 1: for the first time, and I think we're all asking 248 00:12:36,000 --> 00:12:37,280 Speaker 1: the same question. 249 00:12:37,800 --> 00:12:39,920 Speaker 2: Well, isn't that exactly what we should be doing? 250 00:12:40,480 --> 00:12:45,760 Speaker 1: How is it possible that we can't have data exactly 251 00:12:45,960 --> 00:12:48,840 Speaker 1: like this with this kind of real time capability we 252 00:12:48,920 --> 00:12:51,720 Speaker 1: live in the year twenty twenty six. I mean, well, okay, 253 00:12:51,760 --> 00:12:54,760 Speaker 1: we don't have the flying cars that the Jetsons promised us, 254 00:12:55,040 --> 00:12:57,079 Speaker 1: but we should at least be able to do numbers 255 00:12:57,160 --> 00:13:00,280 Speaker 1: like this, not through some antiquated formula that probably got 256 00:13:00,280 --> 00:13:05,000 Speaker 1: invented in nineteen thirty seven. Why isn't this the standard, 257 00:13:05,640 --> 00:13:07,640 Speaker 1: and not specifically this company to which I have no 258 00:13:07,720 --> 00:13:11,200 Speaker 1: financial connection with, Why isn't something like this the standard 259 00:13:11,360 --> 00:13:14,359 Speaker 1: that economists used in figuring out the numbers. 260 00:13:14,000 --> 00:13:14,839 Speaker 2: All the damn time? 261 00:13:16,360 --> 00:13:20,240 Speaker 3: Well, okay, you just said it nineteen thirty seven, and 262 00:13:20,280 --> 00:13:22,640 Speaker 3: actually you're pretty close to the correct year when all 263 00:13:22,640 --> 00:13:25,640 Speaker 3: this stuff was invented. That is exactly correct, and it's 264 00:13:25,640 --> 00:13:29,000 Speaker 3: the government. Does the government change? Does the swamp change? 265 00:13:29,480 --> 00:13:31,160 Speaker 3: This is why I was a big fan of EJ 266 00:13:31,320 --> 00:13:33,680 Speaker 3: going in there, and I'm very disappointed that he didn't 267 00:13:33,679 --> 00:13:36,520 Speaker 3: get in because we need some brain power to fix 268 00:13:36,600 --> 00:13:40,160 Speaker 3: the problem in the government. You know, Elon Musk was 269 00:13:40,160 --> 00:13:42,520 Speaker 3: trying to fix it. You know, EJ was going to 270 00:13:42,559 --> 00:13:44,640 Speaker 3: fix it. You and I would like to fix it. 271 00:13:45,000 --> 00:13:49,480 Speaker 3: You know, there's so many problems that it's archaic and 272 00:13:49,600 --> 00:13:53,360 Speaker 3: swampish that they will not fix the problem private industry. 273 00:13:53,440 --> 00:13:55,839 Speaker 3: So I'm not saying this company is the best. The 274 00:13:55,880 --> 00:13:59,360 Speaker 3: research I've done is it's gotten mixed opinions. But I 275 00:13:59,400 --> 00:14:02,600 Speaker 3: can tell you so this technology exists, there's no reason 276 00:14:02,640 --> 00:14:05,439 Speaker 3: the government should implement it. It's simply the swamp. It's 277 00:14:05,440 --> 00:14:09,040 Speaker 3: the bureaucracy. And it's shocking to me that we're still 278 00:14:09,120 --> 00:14:13,199 Speaker 3: using methods from nineteen thirty seven instead of when we've 279 00:14:13,200 --> 00:14:15,160 Speaker 3: got AI in front of us right now to help 280 00:14:15,200 --> 00:14:16,040 Speaker 3: us do a better job. 281 00:14:16,720 --> 00:14:20,240 Speaker 1: Talking to doctor Matt Weell, economist at the University of Indianapolis, 282 00:14:20,680 --> 00:14:22,120 Speaker 1: you know this this economy. 283 00:14:22,120 --> 00:14:24,240 Speaker 2: People are going to look at this report on the. 284 00:14:24,200 --> 00:14:26,960 Speaker 1: PPI and inflation say, oh see everything's terrible. 285 00:14:27,120 --> 00:14:28,560 Speaker 2: No no no, no, no, no no no no. 286 00:14:29,240 --> 00:14:32,600 Speaker 1: Mortgage rates under six percent is a big deal. According 287 00:14:32,600 --> 00:14:35,400 Speaker 1: to Freddie Mack under six percent for the first time 288 00:14:35,440 --> 00:14:38,320 Speaker 1: since twenty twenty two. You got the ten year treasury 289 00:14:38,400 --> 00:14:41,520 Speaker 1: now under four percent. Talk to me about what these 290 00:14:41,600 --> 00:14:43,280 Speaker 1: numbers mean and what it is you're seeing. 291 00:14:44,160 --> 00:14:48,840 Speaker 3: Okay, this is a mixed picture. First of all, the 292 00:14:48,880 --> 00:14:51,720 Speaker 3: mortgage rates are fantastic. It's so good that they're down. 293 00:14:52,120 --> 00:14:55,760 Speaker 3: They're down because Trump did something really good. But I 294 00:14:55,800 --> 00:14:58,520 Speaker 3: don't like the fact that he can actually be allowed 295 00:14:58,520 --> 00:15:02,400 Speaker 3: to do Itapons here is they control they being and 296 00:15:02,440 --> 00:15:07,640 Speaker 3: when I'm referring specifically to the federal government, they control 297 00:15:07,800 --> 00:15:10,600 Speaker 3: Freddy and Fanny from the two thousand and eight mortgage 298 00:15:10,640 --> 00:15:15,000 Speaker 3: crisis and that whole mess. The federal government now controls 299 00:15:15,080 --> 00:15:19,680 Speaker 3: the two biggest mortgage companies in the country. It's not 300 00:15:19,720 --> 00:15:22,760 Speaker 3: privately owned. And I can bore you with the too 301 00:15:22,760 --> 00:15:26,000 Speaker 3: Big to Fail on how this happened. But what is 302 00:15:26,040 --> 00:15:29,200 Speaker 3: transpired is that Trump has said to Freddy and Fanny, 303 00:15:29,400 --> 00:15:32,360 Speaker 3: you need to start buying mortgages again, which is correct. 304 00:15:32,400 --> 00:15:35,440 Speaker 3: They need to start buying mortgages again. And they spend 305 00:15:35,440 --> 00:15:40,680 Speaker 3: two hundred billion dollars in the last few days buying mortgages. 306 00:15:41,400 --> 00:15:44,560 Speaker 3: And guess what when they bought the mortgages mortgage rates 307 00:15:44,600 --> 00:15:47,480 Speaker 3: drop because they're a private company. They're not printing money. 308 00:15:47,640 --> 00:15:50,720 Speaker 3: When the government buys them, they're printing money, they cause inflation. 309 00:15:50,920 --> 00:15:54,360 Speaker 3: When a private company buys mortgages, that's a better decision, 310 00:15:54,440 --> 00:15:57,520 Speaker 3: and that's what's happening. So they're pulling down interest rates 311 00:15:57,880 --> 00:16:02,760 Speaker 3: by purchasing mortgages, which is Freddie and Fanny supposed to do, 312 00:16:02,920 --> 00:16:05,760 Speaker 3: instead of the federal government. It's a great thing. Trump 313 00:16:05,840 --> 00:16:08,480 Speaker 3: is right on target with this. I just don't like 314 00:16:08,520 --> 00:16:12,080 Speaker 3: the federal government being in control of private. 315 00:16:11,720 --> 00:16:17,000 Speaker 2: Companies, and I don't either. Drives me absolutely up a wall. 316 00:16:17,360 --> 00:16:20,320 Speaker 1: And so this is where the difference between my conservatism 317 00:16:20,760 --> 00:16:26,000 Speaker 1: and Trump's populism comes into play. But what the future 318 00:16:26,040 --> 00:16:28,680 Speaker 1: homeowner is going to say is, well, this is much better. 319 00:16:29,280 --> 00:16:31,120 Speaker 1: I have made the argument that you needed to be 320 00:16:31,280 --> 00:16:34,080 Speaker 1: under you need to be about five and a half. 321 00:16:34,400 --> 00:16:35,760 Speaker 2: I want to make sure I've got this right. 322 00:16:37,040 --> 00:16:41,120 Speaker 1: Guys like Kevin O'Leary from Shark Tank think you need 323 00:16:41,160 --> 00:16:44,200 Speaker 1: to be under five percent for things to really explode. 324 00:16:44,240 --> 00:16:45,680 Speaker 2: Now maybe I have that reversed. 325 00:16:45,720 --> 00:16:47,280 Speaker 1: And he's the guy who's like, if you're at five 326 00:16:47,280 --> 00:16:48,920 Speaker 1: and a half percent, you'll start selling homes. 327 00:16:49,240 --> 00:16:51,720 Speaker 2: Is there a feeling amongst economists that if. 328 00:16:51,600 --> 00:16:55,240 Speaker 1: Mortgage rates were x, you would see an exponential rise 329 00:16:55,480 --> 00:16:57,560 Speaker 1: in home buying and home selling. 330 00:16:58,560 --> 00:17:02,320 Speaker 3: Yes, yes, the answer is yes. It's not the absolute amount, 331 00:17:02,320 --> 00:17:04,720 Speaker 3: it's the shift in the amount that matters. If you 332 00:17:04,800 --> 00:17:08,000 Speaker 3: have a shift that's about seventy five basis, about point 333 00:17:08,040 --> 00:17:11,600 Speaker 3: seventy five percent to one percent, that's when you start 334 00:17:11,640 --> 00:17:15,360 Speaker 3: seeing this activity happening. So it's not under five, under four, 335 00:17:15,480 --> 00:17:19,240 Speaker 3: under three, it's when it drops by about zero point 336 00:17:19,280 --> 00:17:23,040 Speaker 3: seventy five percent, that's when you start getting the magic activity. 337 00:17:23,440 --> 00:17:26,440 Speaker 3: So this is again, this is one of the things 338 00:17:26,480 --> 00:17:30,040 Speaker 3: Trump is doing right. I don't necessarily like the government control, 339 00:17:30,359 --> 00:17:33,520 Speaker 3: but getting the mortgages out of the central government and 340 00:17:33,680 --> 00:17:37,760 Speaker 3: into private companies is exactly the right move. I hope 341 00:17:37,760 --> 00:17:41,320 Speaker 3: he succeeds and finishes the job on this. By the way, 342 00:17:41,520 --> 00:17:43,360 Speaker 3: I got to tell you, you know, this is one 343 00:17:43,359 --> 00:17:45,640 Speaker 3: of the great things he's doing. You know, a line, 344 00:17:45,680 --> 00:17:48,040 Speaker 3: a throwaway line that people need to pay attention to 345 00:17:48,119 --> 00:17:50,639 Speaker 3: in the State of the Union was this whole data 346 00:17:50,640 --> 00:17:54,160 Speaker 3: centers having their own energy production. He's doing so much 347 00:17:54,200 --> 00:17:57,520 Speaker 3: blocking and tackling that doesn't make the headlines. It's causing 348 00:17:57,560 --> 00:18:00,240 Speaker 3: good things for the economy, and I wish those things 349 00:18:00,240 --> 00:18:03,280 Speaker 3: that are blocking and tackling would be pushed faster because 350 00:18:03,359 --> 00:18:08,480 Speaker 3: both the mortgage issue and the data centered energy issue, 351 00:18:08,600 --> 00:18:11,600 Speaker 3: those two things could dramatically improve the economy. 352 00:18:12,119 --> 00:18:16,000 Speaker 1: Doctor Mattwell, economists at the University of Indianapolis. I appreciate 353 00:18:16,320 --> 00:18:19,000 Speaker 1: the drill down. We will talk more in the future. 354 00:18:19,040 --> 00:18:20,919 Speaker 1: I'm Tony Katz. This is Tony Katz today.