Short-term corporate borrowing climbs

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On the program today, we've got corporate debt.

We've got economic data, the soft kind,

and then we're going to go shopping from American Public Media.

This is Marketplace.

In Los Angeles, I'm Kai Rizdahl.

It is Tuesday today, the 2nd of September.

Good as always to have you along, everybody.

With the obligatory reminders that the stock market is not the economy and also that you should always consult your own financial advisor, I will note here up at the top of the program that September, early September in particular, is historically the worst period of the year for stocks.

So forewarned and all that.

But the first couple of days after Labor Day are also typically pretty busy for companies looking to issue bonds, borrow money is another way to put that, as they raise cash ahead of the winter holidays.

What usually happens is that companies issue long-term debt, bonds with maturities in the years or even decades.

But another kind of corporate borrowing has been surging all of this year, a kind of short-term debt that's paid off far faster than your typical corporate bond.

It's something called commercial paper.

And as Marketplace Justin Ho reports to get us going, the booming commercial paper market can tell us quite a bit about what companies are thinking right now.

The commercial paper market is kind of like that 2 p.m.

snack before dinner.

It's probably not loaded with fiber or protein, but it will hold you over for a little while.

It kind of provides a low-cost, instantaneous almost cash infusion.

John Bay is a finance professor at Northeastern University.

He says commercial paper typically matures in months or even days.

Companies don't use it to finance expansions or acquisitions or other long-term plans.

Instead, they spend it on the basics.

Paying the employees, paying your suppliers on time.

Up until recently, borrowing money on the commercial paper market has not been that popular.

Winnie Cesar, head of strategy at Credit Sites, says after the financial crisis of 2008, interest rates were near zero for years.

If a company can lock in a 10-year bond for a relatively low yield, a lot of companies like that certainty.

But this year, interest rates on long-term bonds have shot up thanks to concerns about the economy, government debt, and inflation.

Cesar says says many companies don't want to lock themselves in to decades of bond payments at today's high rates.

Going to the commercial paper market where you know that you're not going to be locked in for a particularly long period of time makes a lot of sense.

There are risks involved with short-term debt.

Lawrence Gillam at LPL Financial says companies have to keep reborrowing whenever it matures, and a lot can happen before commercial paper comes up for renewal.

The macroeconomic environment could change, your corporate profile could change.

But right now, Gillum says companies think those risks are worth it, especially if interest rates come down soon.

John Bay at Northeastern University says many companies are thinking that long-term investments are riskier.

This surge in commercial paper is probably reflecting the short-term orientation and the nature of company thinking these days, at least for this year.

Because when the economy is uncertain, short-term debt can help companies wait it out.

I'm Justin Ho for Marketplace.

Wall Street today, that thing I said about September being bad for equities,

yeah, that.

We'll have the details when we do the numbers.

The government of the United States is very, very,

very

interested in computer chips.

Or, more specifically, who's designing and making computer chips.

Case in point, today the Trump administration revoked a waiver it had given to Taiwan Semiconductor Manufacturing Company, TSMC, as it's known, to use American machinery to make older generation semiconductors at a plant in China.

President Biden had the CHIPS Act.

President Trump got that equity stake in Intel.

Different in kind, yes, substantively too, but similar in context.

The federal government taking a significant role in the U.S.

semiconductor industry.

So, how's that working out so far, do you think?

Here's Marketplace's Matt Levin.

So, pretty much all the most advanced computer chips in the world, the kind that power cutting-edge AI technology like ChatGPT, all those are made in Taiwan by the Taiwan Semiconductor Manufacturing Company, aka TSMC.

With Taiwan's very existence being something of a sore spot for China, that's a problem.

Matt Pearl is with the Center for Strategic and International Studies.

There was a recognition both in the U.S.

government as well as, you know, in Taiwan and TSMC that there's just a geopolitical need to shift some of the production to the U.S.

So with a $6.6 billion enticement from the CHIPS Act, TSMC started building those massive chip plants in Arizona you've probably heard about.

Chip manufacturing there started late last year.

TSMC Arizona is now churning out semiconductors for phones and other electronics, the first of its kind made on U.S.

soil.

But Pearl says we're still a ways away from being close to what they have 100 miles off the Chinese coastline.

It's going to take time.

It's not only a matter of building the facility and having things in place.

This is really deep, deep process knowledge that you have in Taiwan.

Like the Biden White House, the Trump administration still wants to reshore chip manufacturing and keep China behind on the latest chip tech.

But its tactics are different.

See Uncle Sam's 10% ownership stake in Intel in exchange for chips funds.

Stacey Rasgin at Bernstein Research says American chip fabricators are few and far between.

So if you want a U.S.-based or U.S.

headquarter company that can do leading-edge manufacturing, as well as importantly, leading edge R ⁇ D, Intel's kind of like the only game in town.

But Raskin worries even if the government has a passive share in Intel, it's possible politics could sway the company in the wrong direction.

Like pushing it to manufacture AI chips, it may not be that good at manufacturing.

If you build out a semiconductor factory with no customers, you're basically just digging a hole, throwing money into it, and setting it on fire.

And a 10% equity stake in a fire hole may not be worth all that much.

I'm Matt Levin for Marketplace.

Let's talk data here for a second, the soft kind, not the hard kind you think of when you hear me talk about the Bureau of Labor Statistics, for instance, inflation, the jobs report, that kind of stuff.

Turns out the BLS has a softer side too, the side that measures things like, did you sleep well?

Did you enjoy your lunch?

How late were you up with your baby?

And as our special correspondent Stacey Vannick-Smith reports, those questions and many more add up to something called the American Time Use Survey.

The BLS has been doing it since 2003, and it is nothing less than an economic gold mine.

Here's Stacey.

The other day, economist Allison Schrager and I decided to contribute to the economy.

We're on the High Line, a famed park in New York City's west side, and we are just leisurely hanging out.

We are leisuring.

Economic leisuring.

This is wonderful, but like we're not contributing to the economy that I can see.

Can there be positive externalities to how you spend your leisure time?

Positive externalities is economists speak for good things that come from walking in the park.

Schrager says economists care a lot about this.

I love the time you surveyed.

Economists try to measure utility or like how happy people are.

How happy am I?

You're walking people through a day from 4 a.m.

until 4 a.m.

the next day.

A lot of those hours are sleep.

This is economist Michael Horrigan, one of the architects of the American Time Use Survey.

He says, not only does he want to measure how happy I am, but also when I felt happy.

The time use survey comes out once a year, but thousands of people take it every month, starting with.

What was your first activity?

You know, I got up and I made breakfast.

And then for each activity, how long did it take place?

Like I ate breakfast for 45 minutes.

Right.

So 6.45 a.m.

made coffee with milk, drank it while doom scrolling, and soft-boiling an egg for seven minutes.

This is exactly the kind of information that Horrigan wanted after decades at the BLS, overseeing the jobs data and inflation reports.

That's because the time you survey can help economists understand these numbers more deeply.

And the time you survey goes deep.

Between 3 and 4 p.m.

yesterday, you said you were walking the high line in New York City.

Yeah.

Please use the scale of from zero to six.

How happy did you feel during this time?

A six, for sure.

It was so nice.

How do you feel while doing different activities?

This is from the wellness section of the survey.

Pain.

How much pain did you feel during this time?

From zero to six.

This is emotional pain, right?

Because I did have a blister on my sandal.

It's any kind of pain at all.

Any kind of pain okay well then we're gonna say a one okay it's minor from bliss to blisters there is a lot economists learn from this data it's about how we live in the economy for example if your job is making you frustrated and stressed consider a different field jobs in agriculture logging and forestry ranked the highest on happiness and meaningfulness

and the lowest on stress.

The survey can also help illuminate the economic trade-offs we make.

Take, for example, the role of women in the labor force.

Who's doing the housework?

Let's say we have a traditional husband-wife.

What is that division of labor?

And what does that mean in terms of an opportunity cost?

Do you observe lower work hours by the people who are doing more household production, for example?

Do you observe lower wages?

Child care is one of the hottest topics in the survey.

For example, if companies are desperate for workers and the survey shows people are staying out of the workforce to care for their children, company owners could provide child care, or a city could put policies in place that encourage the creation of daycares.

Well, we are on our leisure activity on the Highline, which was not supposed to cost any money, but I am getting a caffeine headache.

Or as an economist might call it, a positive economic externality.

AKA, there is a coffee card in my future.

The future of the time-use survey?

Very much in question, says Horrigan.

He's worried the survey will be scrapped amidst all the budget cuts and data questions at the BLS.

Could I get a

cold brew, please?

$7.59.

No free leisure.

That's right.

The Consumer Price Index did just report that coffee prices are up 14% over last year, not to mention a 50% tariff on imports from Brazil.

Not loving the outlook for my pain index.

Feeling happier drinking coffee on the High Line in New York?

I'm Stacey Bannock-Smith for Marketplace.

The housing story in this economy the past couple of years, as all y'all know, has mostly been about high prices and lack of supply.

Now, though, that seems to be turning on its head.

According to some analysis from Redfin, there are now 36% more home sellers out there than there are buyers.

It's the biggest mismatch since at least 2013.

On the face of it, that's great news for buyers, right?

They'll finally have some options and maybe some purchasing power.

But things are never quite that simple, are they?

Here's today's installment of our series, Adventures in Housing, where we've been hearing from some first-time buyers.

I'm Tofer Soltis.

I'm a 39-year-old first-time home buyer in New York.

York.

Buying in New York is crazy,

but I always wanted to buy.

I've been saving up for a down payment since probably 2017 or so, but then we were planning a wedding.

So, oh my god, the number of iterations of spreadsheets tracking different projected costs and estimates.

And

honestly, this is terrible.

I was projecting like, well, let me estimate how much we will get in wedding presents because that

then impacts what our down payment can be, which like seems very mercenary, but that's the reality.

Ultimately, we got to 18% down.

We got some help from our parents.

We got some money from the wedding.

And that like ultimately got us to where we needed to be with the down payment and all of the fees and everything but it's not it wasn't a straight line i've heard a lot of narratives about it's cheaper to own than to rent and that is not the case in our situation we went from about 2700 a month for the two of us to if you include the maintenance fee on the apartment It's just under $6,000 a month.

We can afford it, which is wonderful and we're lucky about that.

But yeah, that was a shocker when I started to do the math on what the monthly cost would be.

I was not expecting it to be so much more.

Getting the keys was pretty great.

It wasn't an end, but it was an important milestone.

I feel like the end will be when the guest room is ready to have our first guest.

And we're not done unpacking And we need to buy some furniture and get rid of some other furniture and figure out where everything goes.

We've been showing people pictures of the listing rather than pictures of the actual place we live, just because

it's so far from ready.

So it doesn't feel settled, but

it feels like progress.

Toper Sultis in New York, New York.

Whether you are in your starter home or you're in the one that's going to be forever, tell us about it because this series does not work without you.

Marketplace.org/slash adventures in housing.

Coming up.

Right now, it's like, you know, you buy something and then online, you go back online, it's like a new thing is out.

The new thing in question, old trends.

But first, let's do the numbers.

Dow Industrial is down 249 today, just under 6 tenths percent, 45,295.

The NASDAQ subtracted 175 points, about 8 tenths percent, 21,279.

The S ⁇ P 500 down 44 points, 7 tenths percent, 64, and 15.

As was rumored and then reported last week, Kraft and and Hines are getting a divorce after a decade together.

The matchmaker who put them together, that'd be Warren Buffett, told CNBC he's disappointed that marriage is coming undone.

Wall Street seemed to agree shares in Kraft Hines gave up 7% today.

Bond prices fell.

When that happens, the yield goes up.

The 10-year T-note stands at 4.27%

today.

You're listening to Marketplace.

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This is Marketplace.

I'm Kai Rizdahl.

The macroeconomic phrase of the day today is resource dominance.

It's up at the top of our vocabulary list because China and Russia and India have been getting quite a bit chummier here in this second Trump era.

Beijing and Moscow are doing a deal that could wind up with a huge natural gas pipeline between the two countries.

India has been buying and continues to buy Russian oil at quite a discount, it should be said, President Trump's tariffs notwithstanding.

Marketplace's Elizabeth Troval explains what's going on.

The Russian invasion of Ukraine started an important global divide in oil and gas markets, says Eurasia Group's Gregory Brew.

Due to sanctions and the G7 price cap, Russian crude has been moved into a number of markets, the largest, of course, being India, China.

President Trump's tariffs on India were meant to cut them off from Russian crude.

That hasn't really happened yet.

Consider the recent meeting with leaders of India, Russia, and China.

The relationship with Russia is, if anything, getting warmer.

And the possibility of a new China-Russia natural gas pipeline shows China is prioritizing energy security, given tensions with the U.S., says Columbia University's Tatiana Mitrova.

It actually makes China the key player in the global gas market.

China is a top importer of liquefied natural gas, or LNG, that comes in on ships.

A pipeline from Russia would give China flexibility.

It allows China to buy cheap Russian gas when the prices on LNG are higher and switching to the other suppliers in the periods of low prices.

It has this leverage on pricing and volumes in the gas markets.

It's a great card for Xi Jinping to play.

Jim Crane is with Rice University.

These souring U.S.-China trade relations could actually blow back onto the U.S.

and onto some of President Trump's buddies in the U.S.

shale patch, right?

It raises questions about the Chinese market for U.S.

LNG.

It all feels a little Cold War-ish, says Colin Hendricks with the Peterson Institute for International Economics.

The ultimate effect that this is having on kind of global oil and gas markets is it's creating this kind of interesting bifurcated market.

You have a Western market supplied by the U.S.

and other producers, he says, and a Eurasian block supplied by Russia.

I'm Elizabeth Troval for Marketplace.

You know that thing that happens sometimes where people in one generation think what was happening a generation or two earlier was just better, cooler somehow?

Happens in pop culture all the time.

It happens also in fashion.

Case in point, Gen Z and the Y2K era.

Low-rise jeans, wired headphones, bucket hats, I could go on.

Plenty of companies are successfully riding that wave.

Bath ⁇ Body Works is expanding to more than 600 college campus stores.

Abercrombie and Fitch just raised its outlook for the second quarter in a row.

But just because you're a millennial brand that thrived selling this stuff 20-ish years ago doesn't necessarily mean you're going to have success selling it to Gen Z.

Claire's the accessory chain for tweens is in bankruptcy, plans to close hundreds of stores forever 21, same boat.

So with millennials aging out of a coveted advertising demographic and Gen Z aging in,

Now's kind of a make-or-break moment for retailers that define the 90s and early aughts.

Marketplace's Kristen Schwab has this look at Y2K brand nostalgia.

There's a stretch of New York City's Soho neighborhood that's become a paradise for young shoppers.

Angela Jing, who's 22, is out browsing with a friend.

I just go to like the same five stores, I feel like.

Newer clothing stores like Princess Polly and older ones like Pac Sun, which in my day was known for graphic tees and flip-flops, styles, I'm told, are in again.

Can I name some brands and you can tell me if they're in or out right now?

Abercrombie.

I think it's in.

I like started getting my going out tops from there.

Hearing the phrase going out tops makes my eyes go wide.

For millennials, it meant any strappy sequin something you'd wear to the bar.

This year, searches on Google for going out tops hit an all-time high.

I keep the game going with another set of shoppers, Melanie Marin and Miguel Romero, who are 20 and 21.

American Eagle.

Ow.

Definitely ow, especially with their new marketing stuff that they try to pull.

Ow.

Romero's talking about the controversial Sydney Sweeney Has Good Jeans ad.

I ask about a brand that feels American Eagle adjacent.

Hollister?

I think that's in.

It's in.

They just did a new drop where it was like the throwbacks to like 2010s, like Hollister collection drops.

We're talking baby doll tops, embroidered jeans, and fleece shorts that say words like surf across the butt.

Very similar to a pair I owned as a teen, despite living in Minnesota, where there is definitely no surfing.

And look, it's always been true that in fashion and culture, everything old is new again.

But Corey Seamiller, a professor at Wright State University who studies Gen Z, says something about how this group longs for the past is different.

We're calling them like a throwback generation in so many ways.

Like there's this sense of nostalgia for a simpler, less stressful time.

A time when politics, advertising, and technology weren't all consuming and overwhelming.

Seamiller thinks this is why young people are going low-tech.

They're gathering on Pinterest, more than half of the app's users are Gen Z, and they're buying Walkmen and digital cameras.

Those types of gadgets, in some ways, are symbolic of that nostalgia of those times of simplicity.

Gen Zers were born between the mid-1990s and early 2010s, which means they're sentimental about an era they didn't really experience.

Andrew Roth is CEO of DCDX, a Gen Z research firm that's worked with brands like Chipotle, Crocs, and Simon Malls.

He says for brands trying to tap into this nostalgia, just regurgitating Y2K trends isn't enough.

If you're in a spot where you need to find and chase that, then you're probably already behind and missing the mark somewhere.

Roth says that strategy results in everything looking and feeling the same.

What also doesn't work are ads that feel like stunts.

Social media has made Gen Z weary of cheap grabs for attention.

So what is a successful take on nostalgia?

Roth points to Gap's new Better in Denim campaign featuring the girl group Cat's Eye.

The ad is set to a very millennial song, Milkshake by Khaleese, which came out in 2003.

My milkshake brings all the boys to the yard and their life is better than yours, damn right.

The 90-second video is a callback to those old Gap khaki ads.

All dance, no talk, taped on a plain white set.

It feels old, but new.

A TikTok-ified version of 90s Gap.

What they've done well is blend a mix of novelty and nostalgia.

I think the brands that balance that well, they understand who they are and where they're trying to go.

It's a tall task these days.

With social media, fads move so fast that microtrends is now a Gen Z term.

Melanie Marin, the young shopper in Soho, says it's kind of exhausting.

You know, right now it's like, you know, you buy something and then online you go back online it's like a new thing is out so it's like it's i think it definitely does feel like faster now y2k is in today but inevitably tomorrow it'll be something else in new york i'm kristen schwab for marketplace

This final note on the way out today in which we're going to give you a couple of seconds to lower the volume if the kids are around.

I'll count it out here.

1,001, 1,002.

All right, here we go.

I'm sorry, Virginia, there may not be a Santa Claus this year.

Saw this in the Wall Street Journal that shipping rates from China to the U.S.

West Coast are off 68%.

68% since June.

Tariff chaos, related economic uncertainty, you all know the drill as well as I do.

Companies keeping their powder dry, not shipping things until they get some clarity.

The catch, of course, is that this is when all that holiday stuff would ordinarily be on the water.

Jordan Manji, Tunio Maharanj, Janet Wynn, Olga Oxman, Virginia K.

Smith, and Tony Wagner are the digital team.

And I'm Kylie Risdahl.

We will see you tomorrow, everybody.

This is APM.

Hi, this is Gabriel from La Mesa, California.

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