Rare Earths, Real Problems: Why Your Next Car Will Cost More | Wall Street Wrap-Up

Speaker 1 Here's one piece of advice that I've given for years: build an emergency fund. Aim to stash away enough to cover at least three months of expenses in case your income suddenly drops.

Speaker 1 Sounds simple, right? But let's be honest, it's not. Saving even one month's worth of living costs can feel impossible.

Speaker 1 Just when you're making progress, that check engine light blinks on and derails your plans. Life already throws enough curveballs.
You don't need your bank adding to the chaos.

Speaker 1 That's why it's so important to choose one that makes makes savings easy and doesn't nibble away at your hard-earned money with ridiculous fees. Chime understands that every dollar counts.

Speaker 1 That's why when you set up direct deposit through QIIME, you get access to fee-free features like free overdraft coverage, getting paid up to two days early with direct deposit, and more.

Speaker 1 With qualifying direct deposits, you're eligible for free overdraft up to $200 on debit card purchases and cash withdrawals. To date, QIIME has spotted members over $30 billion.

Speaker 1 Work on your financial goals through Chime today. Open an account in just two minutes at chime.com/slash MNN.
That's chime.com/slash MNN. Chime feels like progress.

Speaker 2 Chime is a financial technology company, not a bank, banking services and debit card provided by the Bankor Bank NA or Stripe Bank NA. Members FDIC.

Speaker 2 Spot me eligibility requirements and overdraft limits apply. Timing depends on submission of payment file.
Fees apply it out of network ATMs, bank ranking, and number of ATMs, according to U.S.

Speaker 2 News and World Report 2023. Chime, checking account required.

Speaker 3 I live in LA now, but lately I have been craving the seasons. Snow, hot cocoa, the whole thing.

Speaker 3 I don't even ski, but I have been daydreaming about working remotely from somewhere really cozy on the East Coast, like a cute little ski town for a little bit.

Speaker 3 And whenever I know I'm going to be gone for a while, I always remind myself that my home can actually be working for me while I'm away because I host my space on Airbnb.

Speaker 3 It is one of the easiest ways to earn passive income from something you already have, and that extra income feels particularly helpful this time of year as we approach the holidays.

Speaker 3 A lot of my friends say that sounds amazing, but where do you find the time to manage guests and bookings? And that's when I tell them about Airbnb's co-host network.

Speaker 3 Through Airbnb, you can find a local co-host who can help you set up your listing, handle reservations, communicate with guests, provide on-site support, even help with design and styling.

Speaker 3 I like to give a personal touch when I'm hosting on Airbnb. So I make a list of my favorite restaurants in the area and I hand write a note welcoming my guests to the property.

Speaker 3 My guests love it, but I also know that some of those little personal touches can take a lot of extra time. So this is the exact kind of thing that you would want your co-host to help you with.

Speaker 3 Whether you're traveling for work or chasing the snow or escaping it, or you've got a second place that just sits there empty more often than you'd like, your home doesn't have to just sit there.

Speaker 3 You can make extra money from it without taking on extra work. Find a co-host at Airbnb.com/slash host.

Speaker 1 Here's one piece of advice that I've given for years. Build an emergency fund.
Aim to stash away enough to cover at least three months of expenses in case your income suddenly drops.

Speaker 1 Sounds simple, right? But let's be honest, it's not. Saving even one month's worth of living costs can feel impossible.

Speaker 1 Just when you're making progress, that check engine light blinks on and derails your plans. Life already throws enough curveballs.
You don't need your bank adding to the chaos.

Speaker 1 That's why it's so important to choose one that makes savings easy and doesn't nibble away at your hard-earned money with ridiculous fees. QIIME understands that every dollar counts.

Speaker 1 That's why when you set up direct deposit through QIIME, you get access to fee-free features like free overdraft coverage, getting paid up to two days early with direct deposit, and more.

Speaker 1 With qualifying direct deposits, you're eligible for free overdraft up to $200 on debit card purchases and cash withdrawals. To date, CHIME has spotted members over $30 billion.

Speaker 1 Work on your financial goals through QIIME today. Open an account in just two minutes at chime.com/slash MNN.
That's chime.com slash MNN. Chime feels like progress.

Speaker 2 Chime is a financial technology company, not a bank. Banking services and debit card provided by the Bankor Bank NA or Stripe Bank NA.

Speaker 2 Members, FDIC, spot me eligibility requirements and overdraft limits apply. Timing depends on submission of payment file.

Speaker 2 Fees apply at out-of-network ATMs, bank ranking, and number of ATMs according to US News and World Report 2023. Chime checking account required.

Speaker 4 I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand.

Speaker 3 It's time for some money rehab.

Speaker 3 Okay, Money Rehabbers, time for Honesty Hour. Last year on the show, I did weekly recaps of the top stories on Wall Street and how they affected you and your wallet.

Speaker 3 And that was the focus of my newsletter, The Money Minute.

Speaker 3 So I surveyed you, my dear newsletter readers, and I asked you whether or not you wanted these news stories at all or evergreen financial tips.

Speaker 3 And by the way, if you are not reading my newsletter, please check it out. I've linked it in the show notes.
Anyway, in the survey, I found that you wanted more evergreen, always relevant money tips.

Speaker 3 So I stopped doing the news episodes of Money Rehab, but then I heard from some of you who really loved those episodes and you missed them when they went away.

Speaker 3 So my question is, should I bring them back? If you're a new listener, you you might not have heard one of these episodes. So I am doing one today.
Please let me know what you think.

Speaker 3 And if you're into these, slip into my DMs at Nicole Lappin and let me know that you want me to bring them back.

Speaker 3 So without further ado, here are the top stories on Wall Street right now and how they're affecting your wallet.

Speaker 3 If you're wondering why cars are getting more and more expensive, why crypto suddenly feels less like a scam and more like a strategy, and why the job market looks okay at glance, but kind of weird under the hood, you're not alone.

Speaker 3 The economy has entered its everything's fine, probably era.

Speaker 3 Today I'm breaking down three stories, a mineral you have never heard of, but is about to hit your wallet, why one digital asset is having an insane glow up, and a labor market that is working but only in certain places.

Speaker 3 Let's start with the car problem. Here is a story straight out of 2023 and 2020, and honestly out of 2018 and 2010 too.

Speaker 3 The auto industry is having a supply chain problem yet again, but this time it's because of rare earth minerals.

Speaker 3 Calling them rare earth minerals always makes me laugh because it sounds like we're going to be talking about gemstones here, but these are not as nice to look at, but they are way more important.

Speaker 3 Rare earth minerals are 17 metallic elements, so you can find these on the periodic table. Some of them you might have heard of already, like scandium or neodymium.

Speaker 3 Now, despite the name, these minerals aren't actually that rare.

Speaker 3 The problem is that they're not found in high concentrations, and separating them from the surrounding material requires all sorts of processing with toxic chemicals.

Speaker 3 The waste produced is often radioactive, it is always toxic, and it's not something that anyone wants nearby. Here's why we should care.

Speaker 3 These minerals are used in nearly every single piece of advanced technology you can possibly imagine. So lasers, fiber optics, batteries, even your microwave.

Speaker 3 There is over a pound of rare earths in every electric car and about half a pound in gas-powered ones. So here's where we come in.

Speaker 3 China currently mines about 70% of the global supply of rare earth minerals.

Speaker 3 In 2024, in response to the Biden administration trying to limit the Chinese computer chip industry, China banned the export of three types of rare earth minerals used to make computer chips, cars, and batteries.

Speaker 3 In April of this year, Chinese officials expanded the restrictions to cover seven more rare earth minerals as well as Chinese manufactured magnets made from them.

Speaker 3 Reuters reports that car companies are in a full panic mode. The New York Times added that this isn't just about cars, it is threatening defense systems too.

Speaker 3 But let's say it is just for cars right now. If automakers can't get that pound or so of rare earth minerals that they need for every single car, they cannot make cars full stop.

Speaker 3 And if they cannot make the cars, prices will go up. It is just supply and demand.

Speaker 3 So, this current moment is starting to look a lot like the chip shortage of 2021 to 2023 when used car prices soared and people were making money just turning in their leases early.

Speaker 3 This means if you're planning to buy or lease a car this year, you'll probably be paying more and you might have fewer models to choose from. Think 2021 flashbacks, but with higher interest rates.

Speaker 3 So... How do we fix this? Well, honestly, we don't have a good solution.
The auto industry has had an inkling that this was coming since 2010 when China cut exports to Japan.

Speaker 3 And so they've had over a decade to try and solve this problem and they have come up pretty empty-handed.

Speaker 3 Companies have tried to develop alternatives to rare earth minerals, but have not succeeded yet. Mining more rare earths in the United States sounds like a great solution, right?

Speaker 3 But remember the toxic waste problem. Nobody wants that stuff in their zip code.

Speaker 3 So really, what happens next depends on global politics, and the best case scenario is China and the US coming to a good trade agreement once and for all.

Speaker 3 But for most of us, the short version is expect car prices to climb and tech prices to follow.

Speaker 3 While minerals have been getting harder and harder to find, another digital asset, digital gold, has been everywhere. Bitcoin ETFs have attracted over $5.5 billion in new investments in May alone.

Speaker 3 That demand helped push Bitcoin to a new all-time high of over $110,000 per coin. And we saw money flow out of traditional equity funds and even gold.

Speaker 3 Yes, gold funds lost $578 million in May, while Bitcoin funds soared. So what the heck is going on with crypto?

Speaker 3 Well, part of the surge has been made possible by the creation of the Bitcoin ETF itself. In the OG days of Bitcoin, it was kind of hard to buy.

Speaker 3 Even creating a digital wallet was too high of a threshold for some people. So for some time, the easiest way was to invest by buying shares of MicroStrategy.

Speaker 3 That's a tech company that holds about 2% of the world's Bitcoin.

Speaker 3 And then in January of 2024, the SEC approved Spot Bitcoin ETFs, and that was a game changer.

Speaker 3 A Bitcoin ETF or exchange traded fund basically lets you invest in Bitcoin without actually buying or storing the crypto yourself.

Speaker 3 You can buy it just like you can a stock in your regular brokerage account, no crypto wallet, no private keys, no sketchy crypto exchanges needed.

Speaker 3 That accessibility and regulatory stamp of approval brought in a wave of new investors, retirement funds, institutional investors, and honestly everyday folks who had just been waiting for a safe way to buy it.

Speaker 3 So why is looking at Bitcoin relative to gold and equity funds newsworthy? If you've invested in a diversified portfolio, this shift matters.

Speaker 3 Fund managers rebalancing toward crypto can change the performance of stocks or sectors you're already in, especially tech, which tends to ride the crypto roller coaster.

Speaker 3 And when people start treating crypto like a safe bet, it usually means the world is feeling pretty unsafe. But that brings me to the third story.
Is the economy really that bad right now?

Speaker 3 When the May Jobs report came out, it showed 139,000 new jobs and an unemployment rate of 4.2%. So in plain English, those are good numbers.
But here's the catch.

Speaker 3 Most of those new jobs came from healthcare and hospitality. Healthcare and social assistance added 78,000 jobs.
Leisure and hospitality added 48,000.

Speaker 3 That means almost every other sector stayed flat or shrank. Manufacturing, for example, lost 8,000 jobs.

Speaker 3 That's really important if you're thinking about switching careers or asking for a raise or if you're still on recession watch.

Speaker 3 In industries outside of care and hospitality, it's getting more competitive, not easier. And now layoffs are starting to spread.

Speaker 3 Walmart, Amazon, Microsoft, Procter, and Gamble have all announced cuts. Citi is pulling back its China operations.
CrowdStrike is replacing 5% of its workforce with AI.

Speaker 3 Disney and Warner Brothers Discovery are also making cuts. Disney says it's for efficiency, and Warner says it's part of a larger restructuring.

Speaker 3 So the job market is still creating opportunities, but only in narrow slices.

Speaker 3 If you're outside of these growth areas, please build a cash cushion just in case and don't wait to job hunt until layoffs hit your team.

Speaker 3 I do not want to scare you, but it is always better to be safe than sorry, especially when it comes to your money. Okay, so those are the three stories that are major on Wall Street right now.

Speaker 3 You might be asking yourself, Labin, what about all the Elon Trump stuff? Don't worry.

Speaker 3 In tomorrow's episode, I'm joined by Dan Nathan, the principal of risk reversal advisors, who you've seen a ton on CNBC.

Speaker 3 In that episode, we're going to talk about the Trump-Musk fallout, how it's affecting Musk's companies, the taco trade, and what Dan is bullish on right now.

Speaker 3 But until then, here's today's tip you can take straight to the bank. If you're car shopping, start tracking dealer inventory now.
When supply shrinks, prices spike.

Speaker 3 So get ahead of the curve by setting alerts on aggregator sites for models that you want. You will spot price hikes early and maybe even snag a deal before the panic hits.

Speaker 4 Money Rehab is a a production of Money News Network. I'm your host, Nicole Lapin.
Money Rehab's executive producer is Morgan Lavoie. Our researcher is Emily Holmes.
Do you need some money rehab?

Speaker 4 And let's be honest, we all do.

Speaker 4 So email us your money questions, moneyrehab at moneynewsnetwork.com, to potentially have your questions answered on the show or even have a one-on-one intervention with me.

Speaker 4 And follow us on Instagram at MoneyNews and TikTok at Money News Network for exclusive video content.

Speaker 1 And lastly, thank you.

Speaker 4 No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.