transcript

Speaker 1:
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Speaker 3:
[00:32] Coming up on the program today, a short Wall Street tutorial. We'll talk factories and we'll talk price caps, and we will pour one out for Florida oranges. From American Public Media, this is Marketplace. In Los Angeles, I'm Kai Ryssdal. It is Thursday today. This one is the 23rd of April. Good as it always is to have you along, everybody. Wall Street was in a, yeah, maybe war is not so great mood today. Equities fell. The price action, as traders like to say, mostly to the downside. The bigger picture we will do at that spot in the program, where we always do the bigger picture, but we begin today with a single company, and its roller coaster of a month. Avis shares were up seven fold the past 30 days, and they had kept on going up until yesterday. On this Thursday, ticker symbol CAR, get it, Avis, CAR, C-A-R, shares down 48%, the worst day Avis has had in the markets in 28 years. The phrase short squeeze is what you're looking for. Marketplace's Kaylee Wells has today's explainer.

Speaker 4:
[01:55] Short squeezes start because investors bet on a stock doing poorly, also known as taking a short position. Here's an example.

Speaker 5:
[02:03] For whatever reason, I decide that I think Avis is overpriced, and I'm looking for a way to make money off of this.

Speaker 4:
[02:09] In this example, Paul Shea of Bates College will borrow a bunch of shares of Avis stock, sell them while they're overpriced, and then when the price falls, he'll buy them back up and return them to his lender.

Speaker 5:
[02:20] So, I've profited because the price of the stock has gone down. And this is a really popular way that you can bet against a firm, a sector, anything you think is overpriced in a financial market.

Speaker 4:
[02:33] Now, Avis was ripe for the picking because rental car companies have had a rough go recently, says Tyler Shipper with the University of St. Thomas.

Speaker 1:
[02:40] It's still a relatively competitive industry with lots of other potential modes of transportation where people can now get Uber or Lyft pretty easily and get around lots of places.

Speaker 4:
[02:50] But when too many investors take that short position, it drives up the demand for the stock. So the stock price climbs and climbs and climbs, making these investors' bets fail spectacularly. Because the people who lent their stock to the investors say, hey, that stock's worth a lot now, so I want you to give it back. But oh no, the investors sold it, remember?

Speaker 6:
[03:11] They have to actually go into the market and buy that stock in order to return it to whoever they borrowed it from.

Speaker 4:
[03:18] Brett House at Columbia Business School says the short squeeze is when a whole bunch of the loners force that to happen at the same time. Now all those people who wanted to buy the stock back when it was cheap have no choice but to buy it when it's rising.

Speaker 6:
[03:35] And that pushes the price up further and that creates a spiral that is the squeeze.

Speaker 4:
[03:40] Once the investors pay back all their borrowed shares, the price falls and the squeeze ends. Angel Tengulov at University of Kansas says this happened recently with AMC and GameStop.

Speaker 7:
[03:52] Their stock prices remained at elevated levels for an extended period of time after the squeeze events.

Speaker 4:
[03:59] So even though it's been a tumultuous month for Avis, it could mean more money for the company in the long run. I'm Kaylee Wells for Marketplace.

Speaker 3:
[04:08] Live by the meme stock, die by the meme stock, right? A little bit of labor market news before we go on. First time claims for unemployment benefits last week. Basically flat. Low hire, low fire continues to be the byword in the American labor market. Except for this. The Wall Street Journal reports that Metta told its staff today it's going to lay off about 10% of the total workforce comes to almost 8,000 people. It's also not going to hire for about 6,000 other positions. Why, I hear you ask? Efficiency, the company says. Oh, and also because it's going to spend more on artificial intelligence. Stocks down, oil up, bonds just mark in time. We will have the details when we do the numbers. The hard economic data today came from S&P Global, its first estimate of US manufacturing for this current month. And what do you know? Factory output rose this month at the fastest rate in four years fueled in part by the biggest jump in new orders to factories since May of 2022. Good but not, as Daniel Ackerman explains.

Speaker 1:
[05:46] When you drill down into the survey data, says Chris Williamson of S&P Global Market Intelligence, you start to see that the picture is not quite so rosy. For instance, all those new orders aren't because manufacturers are seeing skyrocketing demand for their products.

Speaker 8:
[06:02] This is due to people building safety stocks because they're fearing supply shortages or price hikes in the coming months.

Speaker 1:
[06:12] Manufacturers meanwhile don't know what's coming through the Strait of Hormuz or when, so they're trying to get everything they need to fill those orders on hand now.

Speaker 9:
[06:21] In other words, we're moving into sort of a bunker mentality in manufacturing.

Speaker 1:
[06:26] Zach Rogers researches operations and logistics at Colorado State University. He says it's not unlike last year when US firms stocked up on imports ahead of tariffs.

Speaker 9:
[06:37] The difference now is instead of, oh, let's build up the finished goods, we're in addition to that seeing let's also build up the components that we need for manufacturing that we might not have access to if this war continues on through the summer.

Speaker 1:
[06:51] Rogers says buying in bulk can also reduce how much manufacturers spend on fuel, the price of which is way up. But it tends to be the larger manufacturers that have enough cash to do this.

Speaker 9:
[07:03] The really smaller firms may not be able to afford to do those really big forward buys. And so if this ends up being really expensive, this is going to disproportionately hurt the smaller businesses in the economy.

Speaker 1:
[07:17] There is of course risk in hoarding months worth of materials, says Jason Miller, a professor of Supply Chain Management at Michigan State University.

Speaker 10:
[07:26] If you do a lot of forward buying, your ability to match supply with demand is now reduced.

Speaker 1:
[07:32] Like if rising inflation or a sinking job market causes consumers to buy less of the stuff you make?

Speaker 10:
[07:39] Lord forbid, but let's say that worst case scenario comes to pass. You're now sitting on a lot of excess input inventory and your demand is falling.

Speaker 1:
[07:48] Meaning those manufacturers could end up with a bunch of unsold goods later this year. I'm Daniel Ackerman for Marketplace.

Speaker 3:
[08:21] If you've heard me say it once on this program, you have heard me say it, well, a lot. History matters. Truth is, though, I'm more of an armchair historian. Here's an actual one.

Speaker 11:
[08:36] Meg Jacobs, I teach History and Public Affairs at Princeton University.

Speaker 3:
[08:41] We called her to ask about something that's on everybody's mind of late, the high price of oil and what, if anything, governments might do to limit the economic pain that comes with it. Jacobs wrote a whole book about the energy crisis of the 1970s.

Speaker 11:
[08:56] Which was perhaps the last most chaotic time in terms of uncertainty on global oil markets.

Speaker 3:
[09:06] There were actually two oil shocks in that decade, the first one triggered by the Arab oil embargo in 1973. Richard Nixon was in the White House. Inflation at the start of that year was right around 8.5 percent, then came the oil shock and slowing growth. Say it with me now, stagflation made all the worse by a series of price controls that Nixon had put into place starting in 1971.

Speaker 11:
[09:32] I have a point of view based on the past about today. I do not see any kind of price caps in our future.

Speaker 3:
[09:42] A little Econ 101 here. Price caps, just like it sounds, they limit the price at which any given product can be sold below what the market price would be. It can be on one product or on all of them, which is what Nixon had done. And then the Arab oil embargo came along.

Speaker 11:
[10:00] The shortages we were suffering then were not super acute.

Speaker 3:
[10:05] Even if you don't personally remember back that far, your parents probably do, ask them about the lines to buy gas.

Speaker 11:
[10:12] But we made them more acute by our panic-like behavior, by lining up for hours and hours and traveling around with much of the country's gas supply in our tanks rather than safely underground in oil storage.

Speaker 3:
[10:27] It was not great. But the fact is, today's oil shock is worse, way worse. The International Energy Agency says it could take two years to recover. The key macroeconomic point here is that however much petroleum pain American consumers are feeling, it is worse in the rest of the world, which is why some of them are turning to price caps. In South Korea, the government put a ceiling on fuel products about a month ago. Just today, they announced they would keep them in place for another two weeks. In France, the company Total Energies voluntarily capped the price of gas and diesel at its stations through the end of April. Governments and companies are going to do what governments and companies are going to do. But if you ask an economist, they will tell you price caps can lead to some real problems.

Speaker 12:
[11:16] Because the price is reduced, people want to buy more. So there is more that people want to buy than is available.

Speaker 3:
[11:26] Amihai Glazer is actually an economist, an emeritus professor of it at the University of California, Irvine. And for producers, price caps might mean deciding a product isn't worth selling at all.

Speaker 12:
[11:37] If the price is set very low, then it doesn't even cover my cost. So I would lose money by selling some of the goods.

Speaker 3:
[11:46] You see where this could go, right? Fewer goods, more shortages. But in reality, price caps don't always follow theory, in part because they're often paired with other policies.

Speaker 12:
[11:58] Let me give one example, World War II, which the price controls were effective.

Speaker 3:
[12:02] There were also wage controls back then, and rations on all kinds of things that were subject to price controls, meat and dairy, clothing, gas and car tires.

Speaker 12:
[12:11] And if someone saw his neighbor have four brand new tires, he would look askance at that neighbor. How did he get it? What connections did he have? Why is he doing that?

Speaker 3:
[12:22] Meg Jacobs agrees that the social dynamic was part of why those World War II price caps worked.

Speaker 11:
[12:28] People largely abided by them. It was seen to be patriotic, to relinquish your ration coupons when purchasing these scarce items.

Speaker 3:
[12:38] And because of that, price caps did keep inflation overall low. Back then. Then is not now. And the global economy now is more global. But the longer this oil shock drags on, the more price caps are going to keep popping up. Coming up.

Speaker 13:
[13:27] But the situation is dire, I mean, extremely dire.

Speaker 3:
[13:30] Want some orange juice for breakfast? Yeah, not so fast. But first, sure, okay, now, let's do the numbers. Dow Industrial is down 179 today. Four tenths of 1% closed at 49,310. The Nasdaq dropped 219 points, nine tenths percent, 24,438. The S&P 500 dipped 29 points, four tenths percent, 71.8. Oil prices, you ask, at the end of a tension-filled day in the Middle East, another tension-filled day, I guess. Brent Crude, the International Benchmark, up 3% finished at $105 a barrel, West Texas Intermediate, also jumped 3%, closed at almost 96 bucks per. Software company ServiceNow tanked after reporting a 20% increase in subscription revenue over the last quarter. Catch is it could have been more, they said, if it weren't for some contracts in the Middle East, which were delayed by you know what. ServiceNow plunged 17 and 7 tenths of 1%. Microsoft announced some upcoming job cuts today. Some 7% of the US workforce at that company could be offered buyouts. That's about 8750 people give or take. Meta, I told you about. Microsoft gave up 4% today. Meta fell 2 and 3 tenths of 1% on the day. Texas Instruments, which makes, as you know, semiconductors and processors beat expectations. Shares flew up 19 and 4 tenths of 1%. Bonds down, the yield on the 10-year T-note up 4.32%. Oh yeah, right, you're listening to Marketplace.

Speaker 14:
[15:00] The economy is a lot right now. We can't control interest rates or tariffs. As a business owner, you can only control how efficiently your business operates. Payroll is also a lot of late nights, double checking numbers, worrying about missing tax filings or costly mistakes. That's where Gusto comes in. Gusto is online payroll and benefit software built for small businesses. It's all-in-one, remote-friendly, and incredibly easy to use, so you can pay, hire, on-board, and support your team from anywhere. With automatic payroll tax filings, simple direct deposits, and built-in tools for offer letters and on-boarding documents, Gusto helps reduce administrative workload and streamline day-to-day operations. When every hour counts, having systems run smoothly can make a meaningful difference. Try Gusto today at gusto.com/marketplace, and get three months free when you run your first payroll. That's three months of free payroll at gusto.com/marketplace, gusto.com/marketplace.

Speaker 15:
[16:01] Right now, we are living through some of the most tumultuous political times our country has ever known. I'm David Remnick, and each week on the New Yorker Radio Hour, I'll try to make sense of what's happening alongside politicians and thinkers like Cory Booker, Nancy Pelosi, Liz Cheney, Tim Waltz, Katanji Brown Jackson, Newt Gingrich, Robert F. Kennedy Jr., Charlamagne tha God, and so many more. That's all in the New Yorker Radio Hour, wherever you listen to podcasts.

Speaker 3:
[16:31] This is Marketplace. I'm Kai Ryssdal. The effective tariff rate in these United States as of the 2nd of April, this is according to the Yale Budget Lab, was 11%. Might not sound all that high given some of the numbers President Trump was throwing around during his illegal tariff spree that started last April, but it is, in fact, the highest rate of import taxes we have had since 1943. Now, though, after the Supreme Court ruling a couple of months ago, the administration has to give $166 billion of that haul back. So how's that going? Marketplace's Kristin Schwab made some calls.

Speaker 16:
[17:09] On Monday morning, Sarah Wells woke up bright and early. The tariff refund portal was set to open at 8 a.m. Got on at 7.50 in the hopes that maybe I could be first in line. And I would say under two or three minutes, I had an accepted, no error approved refund submission. Wells owns Sarah Wells Bags, which makes products for new moms. She was surprised everything went so smoothly, especially after how hard it was to do the first step, setting up a refund account. It's cumbersome, it's technologically kind of glitchy. There's a lot of terminology and acronyms that I had no idea what they meant. Wells hopes to get about $20,000 back from the government, including interest, in 60 to 90 days. I don't think it's going to sit in my account very long. She needs more inventory, and there are still other tariffs to pay. Ashley Akers is a partner at Holland and Knight, whose clients range from small companies applying for thousands of dollars in refunds to large corporations owed millions. She says for the majority of businesses, refund applications have been drama free, but a lot is still up in the air.

Speaker 17:
[18:16] It's been a really crazy time. Yesterday, we fielded hundreds and hundreds of questions.

Speaker 16:
[18:24] Questions like, when can I collect the rest of the refund I'm owed?

Speaker 17:
[18:28] I'm not saying a lot of clients are going to get 100%. It seems like a lot of businesses are going to get some early reprieve in this phase one, but are certainly still going to be waiting for additional refunds.

Speaker 16:
[18:40] Phase one of the tariff refund process covers about 60% of what's owed. It means most companies will have to go through this all over again. And US. Customs and Border Protection hasn't given a timeline for phase two. Anne Robinson owns a specialty grocery in Greensboro, North Carolina, called Scottish Gourmet USA. She sells products like whiskey haggis sauce and shortbread. It took a few tries to get her $23,000 claim through the system. At around 3 p.m., she finally got to celebrate.

Speaker 18:
[19:11] And I did like a touchdown move.

Speaker 17:
[19:12] Yay! I did it!

Speaker 18:
[19:14] It's done!

Speaker 16:
[19:15] Kinda. Robinson still has to chase down $10,000 from FedEx, DHL, and UPS, because though she paid tariffs on those shipments, the logistics companies were technically the importers and have to file claims on her behalf. Meanwhile, she's just feeling uneasy. What if her claim is delayed or the government appeals the tariff ruling, or finds a new way to make temporary tariffs in place now permanent?

Speaker 18:
[19:42] I have to assume it's at least as much that our government at this point in time is going to continue to try to find ways to take out of the pockets of tens of thousands of small businesses in order to cover a huge deficit.

Speaker 16:
[20:00] Even with a refund on the way, Robinson feels like she's still operating her business with the same uncertainty she did a year ago.

Speaker 18:
[20:07] What's going to come next? I have no way of knowing what my pricing should be for fall and Christmas 2026.

Speaker 16:
[20:18] She's got to know soon. About now is when most businesses have to decide how much to manufacture, buy, and import for the holidays. I'm Kristin Schwab for Marketplace.

Speaker 3:
[20:57] You are more likely, I learned in an article in Slate the other day, to see an orange on the 18 million license plates printed by the state of Florida than you are likely to see one of the 12 million actual oranges Florida produces every year. So, complete is the collapse of citrus there. Iconic is a big word, but it does fit with Florida and oranges. Or it used to, anyway. Alex Salmon wrote the story that I was reading. Welcome to the program.

Speaker 13:
[21:24] Hey, Guy. Thanks for having me.

Speaker 3:
[21:26] Describe for me, would you, the mood in the room at the 2026 Florida Citrus Show, the scene with which you start this piece.

Speaker 13:
[21:36] Well, let me say that to begin with, agricultural optimism is a very real trait. And farmers, they're used to dealing with difficulty, and they're used to taking it on the chin. And so there was some optimism somewhere. I think it wasn't non-existent, but the situation is dire. I mean, extremely dire in the Florida citrus industry, and there was no getting around that.

Speaker 3:
[21:58] Greening, we have talked about on this program, and I think a lot of people know the challenges that the citrus industry down in Florida is having with the, I don't know if it's a virus or bacteria, but whatever. They're having real problems just sort of biologically. But there are other things going on. Climate change, of course, is one thing. The other thing that you point out, which was fascinating to me, is development and what that has done to the groves and why it's happening.

Speaker 13:
[22:22] Yeah, it's interesting, right? Because, yes, there is very much a biological story to be told here about the demise of the Florida Orange. But there's also really a story of political economy or even just a politics period to be told. The fact of the matter is the economy in Florida has changed dramatically over recent years and developers in Florida have a ton of power. The state's growing quickly. And the result of that is that there's a lot of land that has orange trees on it that could be housing. And those developers have taken over, I think is probably the best way of putting it. And so this area, the ridge in central Florida, the sort of famed, Edenic citrus growing region is also one of the fastest growing counties by population in the entire country. So that land, it's worth a lot of money as housing. And right now it's not worth a lot of money as oranges because they can't really grow them. So the interesting sort of political economy story underneath this is that the Florida citrus industry, because it's lost so much money, has lost a lot of political power. And the developers have gained a ton of political power as Florida has grown and become more of a real estate state. And you sort of see that playing out in real time in the state.

Speaker 3:
[23:31] I alluded to this as I was setting up this interview, but give us a scale, a sense of scale, would you, of the collapse? Because it is, I mean, it's mind boggling.

Speaker 13:
[23:40] Yeah, dramatic. It's, right, so I think the best way to put this is, in 2003, 2004, the Florida orange industry produced 242 million boxes of fruit. Those are 90 pound boxes. This year, they're on pace to produce fewer than 12 million boxes. That's a collapse of more than 95%. 100% of the trees are now infected with citrus greening, which means they're either in the process of dying or dead. And you know, at every metric it's like this, there was a representative from Minute Maid who I spoke to, which is, you know, owned by Coca-Cola, said that three, four years ago, 80% of their juice was from oranges from Florida. This year, 80% of the juice is from oranges from Brazil. Like, three or four years this happened. And so, you know, it's a total collapse. I mean, it's hard to overstate how dramatic it is.

Speaker 3:
[24:31] This is, I mean, it's a lot of things, right, as we've talked about. It's a climate story, it's a biological story, it's development, all of those things. It is also a cultural story. You spend a lot of time driving around with people who, for generations now, have done citrus in Florida. And their livelihoods have been eradicated or drastically changed. It was just sad, I think, you know?

Speaker 13:
[24:55] Definitely, yeah. I felt in the process of reporting it, it was very affecting. You know, it's a social history, right, as well as it is the story of a fruit tree. It's about the old Florida and the class structure of old Florida, right? The citrus families, this dynastic wealth of old Florida. They've also seen a great decline in their stature. You know, people for generations, like the number of names you see in this industry that are juniors or thirds or fourths, and it's really all gone. It's really, it changed so, so quickly. And it's the story of the social history of citrus in Florida, to me, is as persuasive, as compelling, maybe even more than just the sort of economic story or the biological story of the tree itself. And, you know, being there with people who've seen that change firsthand. You know, a lot of this is pegged as recently as to 2007, when the state began to deregulate some of the development standards for the housing industry. And, you know, it went so quickly. And you really get that sense talking to people and being there.

Speaker 3:
[25:57] It is an amazing piece in Slate. You should read it. Alex Salmon wrote it. Alex, thanks a bunch. I really appreciate your time.

Speaker 13:
[26:03] Yeah, thanks so much for having me.

Speaker 3:
[26:22] This final note on the way out today in which, honestly, people, this whole prediction markets thing is getting out of hand. I saw this in the Wall Street Journal today, that the French National Weather Service is investigating irregularities at a weather monitoring station at Charles de Gaulle Airport in Paris. It seems that anomalous temperature spikes led to big payoffs on Polymarket, and that raised some eyebrows among local weather watchers. One trader, it turns out, made more than $21,000 on a $120 bet. If we cannot trust the weather, what are we even doing? Our daily production team includes Libby Burdett, Andy Corbin, Maria Hollenhorst, Sarah Leeson, Sean McHenry, Michaela Sia and Sophia Terenzio. We'll story is the supervising senior producer. I'm Kai Ryssdal. We will see you tomorrow, everybody.

Speaker 16:
[27:25] This is 8 p.m. As the Trump administration ramps up its crackdown on immigration, more people are making the difficult decision to leave the United States. I'm Reema Khrais, and this week on my podcast, This Is Uncomfortable, we're asking, what does it really cost to leave the US when you're undocumented? And what can life look like on the other side?

Speaker 19:
[27:49] I have to look around and remind myself that this is not a movie, this is my life. I am able to cross borders that I had never allowed myself to dream of.

Speaker 16:
[28:00] Be sure to listen to This Is Uncomfortable wherever you get your podcasts.