Speaker 1: And Hi, how are you welcome to the Big Podcast.
It's Thursday. I don't know why I love Thursday. Say
just kind of sneak up on you. It's Thursday, the
seventh day of August, Year of Our Lord, twenty twenty five.
My name is Tom Sullivan. Today's tariff day. Yep, it's
the day that all the tariffs go into effect. Kind
of maybe, well, I'm not exactly sure. Disregard everything I've
said so far. It's because of the fact they still
keep changing and the President keeps coming up with new
tariffs and new ideas. And there's no question there's a
whole bunch of people apparently in Washington that are jumping
up and down trying to keep from having these big
tariffs access to them but looking for exemptions. And that's
the other thing the President came up with today is
some exemptions. So it's always changing, and that is probably
the biggest complaint that business has, is that we need
to be able to make plans and we can't figure
out what our costs are going to be with all
the numbers moving around. So we start off, well, let's
listen to the President, because he's talking about how he
wants to add some more tariffs, even though you think
everything was supposed to be kind of set, but it's not. Well,
let's let the president talk about the new tariffs that
he has.
Speaker 2: Economy grew at levels that we haven't seen in a
long time, but the real levels of growth are going
to be judged in a year from now. We're taken
in hundreds of billions of dollars in tariffs. We've really
just started. This is just in its infancy. So we
have a great country. We have a country that is
going to be very rich. It's a country that we're
very proud of, but it's going to be very rich.
Speaker 1: We stop there for a second because he said that
this will be judge really a year from now, and
I agree with him because how this is going to
work because of the fact there's been such a radical
transformation in the way of global trade that when you
move this much, the big change is radical changes. You
really don't know what the whackamall will be, what will
be the results of all this, So I agree with him.
One year from now, which is getting close to midterm election,
this is either going to look genius or it's going
to be very damaging, depending upon how the tariffs work out.
So and the other thing he mentions, and he mentions
it a lot about we've taken in hundreds of billions
of dollars. I don't know if it's been hundreds of billions,
but it's certainly a lot. It's in the billions. So
you ever stop to ask yourself, Well, if the government,
the treasury is getting checks for hundreds of billions of dollars,
who's paying that? Who is writing the check that gets
deposited into the US treasury. Generally it is the people
that pick up the products from foreign sources on our
docks or at our airports. That's who pays. That's where
customs collects the fee. So then the question becomes is
it the company, the wholesaler? Is that maybe the foreign
shipper put a few dollars in on the deal? We
don't know yet. And that's why it goes back to Yeah,
a year from now we will have a much better feel, obviously,
for whether this radical transformation is actually working. But here
here's the president talking about again. He loves tariffs, he
loves them. Here's his new idea.
Speaker 2: We'll be putting a tariffone of approximately one on chips,
and semiconductors. But if you're building in the United States
of America, there's no charge. If you've made a commitment
to build, or if you're in the process of building,
as many are, there is no tariff. Okay, if for
some reason you say you're building and you don't build,
then we go back and get we ended up. It
accumulates and we charge you at a later date. You
have to pay and that's a guarantee.
Speaker 1: So there you go. One hundred percent tariff on chip semiconductors.
Unless you're saying you're going to build here. I just
cannot believe that a lot of these companies that say
they're going to build here are going to build something.
But I don't think they are enthused about it. I
don't think they're having to change all of their business plans.
It's very upsetting to their balance sheets. So yeah, Tim
Cook was in the Oval office last night and doing
all the right things and saying, yeah, we're going to
do five hundred billion, Now we're going to do six
hundred billion. It's an interesting investment on the part of
Apple because they are going to be building pieces of
what it takes to make an iPhone, for example, Apple
announced that it will spend one hundred billion dollars on
suppliers over the next four years. They're not committing beyond that,
they're just trying to get through the Trump administration. Companies
said they would spend as part of that one hundred billion,
two and a half billion to fund a major expansion
with Corning, the big glass company. They make a glass
for the iPhones, and they're going to make that glass
in Kentucky. The company said its investment would incentivize overseas
companies to buy more US made parts. So this is
again they're going to do parts of the phone are
going to be made in the US. And apparently that's well,
you don't know, do you. You don't know if that's
going to be good enough or if Trump's going to
wake up one morning and say that's not good enough.
Therefore we're going to go back and hit you with
all these high terraffs. So there's still a lot of
question marks out there about what all of this means.
But again I go back to where where is this
money coming from? The hundreds of billions of dollars that
he says are being collected. So today being tariff day,
we have the tariffs are as follows. Ten percent tariffs
on countries in which we have a trade surplus. If
we have a trade surplus, why are we charging them
a ten percent tariff? I don't know either. Then there's
a fifteen percent tariff on countries where we have a
trade deficit with them. There's twenty six countries that are
that are having tariffs that are higher than fifteen percent.
Sixty plus countries are involved in total the rates that
we are collecting for tariff money. The rates are the
highest since the nineteen thirties. And if your I know
most people know about the nineteen thirties was the Great Depression.
If you look up your history on the Great Depression.
One of the causes of it wasn't the beginning of
the recession, but it took the recession that was already
started and put us into a great depression. Was the
Smoot Hawley Act. The Smoot Holly Act named after Duke Congressman.
I think one senator, one Congressman. And these rates are
higher than Smoot Hallie, and Smoot Hawley is being blamed
for basically really driving the Great Depression of the nineteen thirties.
So we're higher the rate Smoot Hawley was a twenty
percent tariff. Like I said, We've got twenty six countries
above fifteen percent. We've got one hundred percent of the
on the chip makers and things like that, so overall
highest rates since the nineteen thirties. That's not a good
measure to try to beat grocery prices. The President, when
he had Tim Cook Cook in the Oval yesterday last night,
said prices are coming down. And yet we have story
after story and data after data showing that no, actually
grocery prices are going up. They're not coming down. I mean,
some things may be, but the vast majority of adults
survey by Associated Press are stressed out about grocery prices,
and they're talking about the fact that the cost of groceries.
Fifty three percent of Americans say that it is cost
of groceries is a major source of stress for them.
Another thirty three percent say it's a minor source of
stress for them. Only fourteen percent say that's no stress
at all. So we've got eighty six percent of the
population going grocery prices are stressing them out. So we've
got that. We've also got taxes to talk about. Before
we get to that, let me get to the census,
because the President is also interested in the census. And
it goes back to last week when the jobs report
came out. And we've talked about this before, but I'll
go over it again. Part of the Jobs Report is
created by the Establishment Survey. It's really easy. That's just
simply employers sending in their payroll taxes that they've collected
from their employees, and it has all those reports. It
has everybody in the company's name, social Security number, how
much they were paid, and the taxes that were withheld.
So it's really a cut and dry number. The problem
with the Jobs report is the household Survey, and that's
sixty thousand households that are interviewed by the Census Bureau.
The Census Bureau is the one where the problem is
and it used to be in a different department of Labor,
but now it's in the in the Executive Office. Obama
brought it in. One of the first things he did
was brought the Census Bureau into the White House. And
so with that they are doing their surveys of they
get not only people that are employed. When they call
your house and they say are you working? And you
answer yes or no, And if you say no, they
say have you have you looked for a job in
the last four weeks. So it's a way for them
to pick up not only the unemployed, but how long
the unemployed have been without a job. So there's a
lot that goes on there. Trump wants to have a
revamp of the Census Bureau, and I'm right there with them.
It is they're using nineteen fifties technology. Remember they came
up with the socials or the retirement files for federal
employees is in some cave in Pennsylvania. This is kind
of the same thing. They're doing, the same thing they've
been doing since the nineteen fifties, and as a result,
they're not getting this. They used to get sixty five
percent response rate, Now they're getting about forty percent. So
you're getting lousy numbers on all of that. Brad Todd,
Republican strategist, talks about the fact that they've been wrong
for quite some time, especially back in twenty twenty. That's
the Census Bureau.
Speaker 3: Well, all these things go together, right, We're stopping tax
increases from go kicking in at the end of the year.
Republicans are there's a deregulation agenda that the President has
put in place, and ideally we'll get a rate cut
from Jerome Powell, and all these things have to come together.
I see this latest round of tariffs though, as a
straight up Russia play for the Ukraine War. India was
buying less than one percent of its oil from Russia.
Now it's forty percent. India is basically the profiting sidecar
for the Russia war in Ukraine, and a lot of
the President's critics have been have faulted him for not
being tough enough on Russia. Well, if you want to
stop Russia and Ukraine, you cut off their oil customers,
and punishing India is the best and fastest way to
do it.
Speaker 1: So to the Census Bureau and the fact that they
have been inaccurate even taking the census.
Speaker 3: We know the twenty twenty Census, the errors were almost
always to the detriment of red states Blue states like
Rhode Island. We do know that the Census Bureau's own
audit of its work has proven that Blue states like
Rhode Island were overcounted. Rhode Island then doesn't didn't lose
a seat red states like Alabama were undercounted. They said,
this is just a fact. It wasn't all red blue,
but it was disproportionately red. The census not counting illegal people.
He was focus on that and about the prior census
as well. But reapportionment for twenty thirty is going to
change the map. After the twenty thirty census, there will
be a lot more seats moving to red states, a
lot of states moving away from blue states. That's going
to impact the electoral college. It's going to make it
much tougher for Democrats to win the White House in
twenty thirty two.
Speaker 1: I don't think you need the Census Bureau to tell
you that the population is moving away from the snow
Belt and the rust Belt and down to the sun Belt,
and so the southern states, the Southwest, all of that
is where the population's moving, and that is in Texas
primarily booming. And it's going to lead to more red
states having more congressional seats. It's going to make it
much more difficult for the Democrats to try to win
in the electoral college. Let's check in with Karl Rove,
who's in Texas and knows Texas like the back of
his hand. Well, his idea is about all of what's
going on with them. Well, there's Democrats. They're going to
be first of all, let's admit they're going to be
consequences for both parties as a result of what's happening
in Texas. Then neither party will like Yes, the Democrats
are going to try and do something in all likelihood,
they say in California, but they've got a constitutional requirement
that the lions are drawn by a commission. So Governor
Newsom would need to first get legislation through his very
pliant Democratic legislature, which he can do. But then he
would have to go to the voters in November and
get them to retroactively remove the provision from the constitution
and validate his plan. And that's a very big uphill climb.
New York Governor Hockle says, all's fear and love and war,
and we're going to retaliate. But her constitution prohibits them
from mid decade redistricting, and so hard for us to
see how that gets done. Now, can Maryland step in
maybe and by legislation make it take away the one
Republican seat in the state. Yes, but there are not
a lot of places where you can see a clear
path of the Democrats picking up a number of seats
to counter what might happen in Texas, a gain of
four or five. And remember, while we talked about five
seats in Texas, one of those seats requires the Republicans
to beat a popular, albeit troubled Democratic incumbent who ran
six points ahead of Kamala Harris last fall, and as
one of the thirteen people who thirteen Democrats who want
a seat that Donald Trump carry. It's messaging, but it's
not reality. The census is a very complicated process that
takes ten years to do. Remember this involves knocking on
the door of every home in America or getting a
document back from every home in America in order to
draw these lines. I mean, I think the White House
was also implying, which is accurate, that Texas is a
rapidly growing state. We will we will gain several more seats.
We've got thirty eight today. We will probably be at
forty one forty two seats after the next redistricting that
happens after the next census occurs in twenty thirty. But look,
that's a conversation that's not reality. There's no way that
between now and the twenty sixth election that you could
conduct another census be accurate in the outcome. Hand the
numbers over to the states, go through the process of
writing a plan, have it approved by the states, have
it approved by the courts, implement it, recruit candidates, have
them run campaigns, and get elected. It is way too
short a timeframe for that to happen. It's hard enough
when you have when this happens in the first year
after the census is conducted, for example, in twenty twenty
one for the last time, in order to be ready
for the twenty twenty two election. It takes all of
those nearly two years to get it done. There's no
way that it can get done in my opinion, between
now and the twenty twenty twenty twenty sixth election. Once
that changed what we've been used to forever since us
every ten years, and then redistricting based on that. Karl Rove,
you have any trepidations about what's going on in Texas, Yes,
there is.
Speaker 4: I mean I think that that you know, once you
once you break down the norm, uh that this starts
to happen. And remember both sides have done this. I
remember well when Eric Holder, the Attorney General under Barack Obama,
under what I think and what lawyers told me was
a relatively uh you know, thin legal covering, demanded the
North Carolina Redistrict in the middle of the of the
decade in order to kill in essence, two Democratic seats,
actually two Republican seats, and replace them with Democrats. Let's
let me close by one note. What does the Texas
effort do. It creates two black majority congressional districts, first
time in the history of Texas. Isn't that a goal
of the Voting Rights Act? It creates an eighth Hispanic
majority district, albeit one that's a Republican and it does
so without being involving themselves in these goofy lines like
that we see in Illinois that you know, in which
there's a deliberate attempt to spit into to go hundreds
of miles across the state in order to link together
pockets of one party's supporters in order to get a
congressional seat that it wouldn't otherwise have if it was
relatively compact and community of interest. So if they're doing
this in Texas, and who knows where else they're going
to go. Have you seen this story about they want
to build a nuke plant on the Moon, And I'm going,
what I know people talked about, you know, inhabiting the
Moon someday. I don't know about you. I have no
interest in living on the Moon. I don't know.
Speaker 1: If you live in the desert, maybe you could handle
the Moon. I don't live in the desert. I like
green freeze and things like that. And last time I checked,
mister Moon doesn't have any green tree. So Miles O'Brien
was asked he's an aviation guy, and he was asked
about what's the deal with putting a nuke plant on
the Moon.
Speaker 5: Well, you do need nuclear power if you're going to
have an encampment on the Moon, because the nighttime on
the Moon lasts two weeks and solar is just not
going to do it for you if you really want
to put people on there and have them live. There's
a nuclear reactor that he's fast tracking for an encampment
that doesn't exist, and without the capability of even putting
a single footprint on the surface of the planet.
Speaker 6: It's a little bit the cart before the horse. But
given the context, the geopolitical context, with Russia and China
talking about doing the same. The idea here might be
to create a so called exclusion zone on the Moon,
because you can't actually declare a sovereign turf on the Moon,
but you could say we have a nuclear power facility
and put up a no trespassing sign. Essentially, it's hard
to say, but this is certainly a strange cart Before
the horse moment, you have to consider the fact that
there are technical problems with the rockets that they envision
getting astronauts there, both the government rocket, the Space launch
System Artemis and Elon Musk SpaceX starship, which has not
yet flown a successful flight, which is integral to that
last step to get from the orbit moon of the
Moon down to the surface. None of these transportation systems
have been proven out yet, so to say we'd have
a nuclear power facility there in that time frame is
not realistic.
Speaker 1: Well, that's too bad to hear, because I mean, if
the Texas legislators wanted to leave again because they didn't
like the way things were going in their legislature, I'd
love to see them go to the Moon. Give them
a place up there. People leave them alone. Nobody bothers them.
They got their new plant for the power so they
can turn their their lights on it at the on
the two week night that the moon takes I'm looking
forward to it. I think so are the Texas legislators.
But before we go away from from Texas, this is
definitely moving into the courts. It's crazy. The governor Governor
abbot of Texas has asked the Texas Supreme Court to
oust the Democrat leader, Jean Wu. I don't I'll leave
this to the courts, but I can't imagine that the
Democrats who elected him to be their leader. I don't
think that he doesn't work for the governor. Representatives are
not employees of the state of Texas, nor members of Congress.
Elected officials are not employees or wherever the city council. No,
they're not employees of the city. They are. They work
for their constituents. That's who they work for. We are
their bosses and we are not going to go fire them.
So we'll see how this works out. But it's also
stupid they are you know how this story ends. Not
only have we seen the movie before, but we also
vacating Texas will only end in them coming back and
being out of Texas will just delay the inevitable. But
I guess they have nothing else to do in the
month of August, but a mere delay in Texas legislative
history is the likely outcome. They've also asked Texas lawmen
to go round them up, but that won't work. The
law officials, the law enforcement people in Texas don't have
police powers outside of Texas. And they're talking about in
the FBI. John Cornyn, congressman from Texas, said, oh yeah,
he's talked to the FBI about helping them find the
Texas legislators. And he didn't say go arrest him or
do orn heils, just go find We know where they are.
They're in a hotel about twenty five miles west of Chicago,
so it's not like we don't know where they are.
Nobody can arrest them from Texas. They're going to come back.
Just let them sit there and look silly the very least.
What else do we have for you today, Oh, Joe Biden.
One of the things that's going on with that committee,
in the Oversight Committee, the committee members, the members of Congress,
they went home, but the staffers have to stay and
the staffers are still continuing to bring in former Biden officials,
the top officials. I think there's nine of them that
they have subpoenaed. Have you noticed something strange going on? Today?
Anita Done showed up and she was in there for
a couple of three hours. So they're asking a lot
of questions of these people. But the first couple of
staffers that went in there, the doctor, doctor Kevin O'Connor. Well,
so anyway, they were taking the Fifth Amendment. Doctor Jill's
right hand guy took the fifth Amendment. Nobody since has
taken the fifth you know what they're doing. Instead, they're
telling the staff members of the oversight committee, Now, Joe
was fine. Yeah, I mean I Needa Done said, well,
he physically aged a lot, but I mean all presidents do.
But he was certainly capable of decision making. And that's
what they're all saying. So this is going to turn
out to be once again a congressional nothing, nothing burger.
They're all saying, yeah, j he was Joe. Oh, Okay,
he got older and all that, but he was fine.
So the others are not taking the fifth they're just
making the story up and saying that Joe was perfectly fine.
It's their opinion. You can't charge them with a crime
for their opinion. What else today, Oh well, we have
let me get to the economy. We had the Job's
Report out every Thursday morning, and the Job's report came
in two hundred twenty six thousand first time jobless claims.
That was up from estimate of two hundred and twenty
one thousand, So the jobless claims going up a little bit.
The continuing jobless claims these are the ones of people
more than just more than the first time. They keep
going back every week, week after week after week. That
number went up thirty eight thousand. It's now at one million,
nine hundred and seventy thousand people are collecting unemployment benefits
and that number is continuing to climb. Second quarter productivity
went up up to two point four percent. It was
estimated to be two two point zero. And as you
get more productivity, think of it as you got work
to do in the factory to make widgets. And if
you lay off people, you've got less people making the
same number of widgets. They've got to still get those
widgets out the door, which means the employees that are
left working are more productive because they're getting more stuff
out the door. So productivity went up, but I always
look at it with a little bit of a jaundiced eye.
Labor cost unit labor costs one point six percent, that's
up slightly. Federal Funds rate. What the market thinks about
interest rates. The Federal funds rate shows that the market
believes that the FED will cut interest rates. Ninety one
percent chance that they will cut interest rates at their
mid September meeting. Bed the Federal Funds rates predicts that
there's a sixty two percent chance that the Fed will
also cut in their late October meeting and a fifty
two percent chance that they will cut in their December meetings.
So Wall Street is betting that the Fed is going
to start cutting interest rates because there are more and
more signs that the job market is softening and the
economy is slowing, not a lot, but it's slowing just enough.
And with the tariffs coming and starting to kick in,
all of this is making some concern on Wall Street.
There are a number of firms now that are telling
their clients to get ready for a big correction. I
mean they're literally putting that out in writing. You get
ready for a big correction. I mean, they can't predict
the future. But that's some of the verbiage coming out
from the folks on Wall Street. Let's look at our emails. Okay,
let me read through some of these. This is from Lawrence.
Lawrence says, I enjoy your podcast, short and sweet, to
the point. I've been listening to your show for years.
I live in the Bay Area. My recommendation a bit
more diverse topics. What I do not have a clue,
but keep going. I send them back a note saying
thanks for the feedback. I agree on the more diverse topics.
No excuse, but the news is in the dog days
of summer, and it's limited, and I mean another day
of Texas lawmakers and tariffs and Epstein and I understand,
but we really don't usually get a lot of variety
in what's going on in the news barrel until we
get past labor day. But I appreciate the email. What
else we got here? Let me look down here? Oh,
here's John says. Trump calls India. India calls Putin, tells
him they want to keep purchasing their cheap oil. Is
money more important to Putin than obtaining Ukraine. I'm guessing
that's why he's going to the table. Yeah. That meetings
apparently on next week. Another one from John, I got
two of them, says with the Illinois Shenanigan, wouldn't it
be great if politicians had a lot of obey for
the use of all the funds for political purposes and
like their salaries, a budget to limit all their campaign
contributions and expenditure to office. John the Dreamer, Yeah, you know,
and John, the thing is is that a question was
brought up. I had to look it up last time.
The Texas legislators took off and left. They got their
per diem per day. It's two hundred and seventy one
dollars or something like that per day. Penny sends me
an email about a survey. I was going over the
whole business about how they forecast, how they come up
with the unemployment numbers, and I explained to her the
two methods, one using monthly employment reports, the other one
using a survey that's done nineteen fifty style. And so
she wants she wants them to shake this up. And
Donald Trump did announce today he wants he wants to
modernize the census Bureau. It's about time, it really is.
So President's with you. Oh, Paul Skaggs writes, I wonder
where they get their numbers to make their adjustments. The
headline of the email is bls. Well, they get it
from themselves, because they go out on the survey and
they try to reach sixty thousand households and they're not
doing a good job of it, so they keep going
and that's why we get three reports at the end
of the month. Within the first few days, at first
Friday of the month following, they come up with their
first look. Then they always adjust those numbers, but not
like the numbers that they've been adjusting lately. So they
adjust them thirty days letter because later later, because they've
had more input, they've reached more people. And then finally
thirty days after that they get the final final print,
as we say, of what the unemployment numbers were for
what was essentially three months prior. So they get them
simply by continuing to bang on the door of the
people that they're supposed to be taking the survey from.
That's where they get their numbers. On Wall Street today,
let's see, Oh, we started off up three hundred. I
think it was, and we finished down two hundred down
two hundred forty three, nine sixty eight, SMP down five,
Nasdaq up seventy three, So a little bit of a
mixed market. Price of gold today up forty nine dollars
to thirty four eighty two, and oil back and forth.
We go down fifty cents a day to sixty three
dollars and some change for a barrel of oil. So
that's it for today. Thank you for coming by. Hope
we'll see you back here. It's Friday tomorrow. Hope to
see you then.