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00:12: This is the indicator from Planet Money.
00:13: I'm Whalen Wong.
00:14: And I'm Daryl Woods.
00:16: And you're listening to Indicators of the Week.
00:20: And today we are joined by our colleague from Planet Money, Keri Malone.
00:25: It is I.
00:26: I am here.
00:27: I am here.
00:28: I am here.
00:29: There's a cloud of smoke that emerged around you when you've walked in the door.
00:33: Is that not how you guys enter a room?
00:34: Like what do you do?
00:36: So today we're going to bring you a variety of different
00:39: shocking, stunning, or inspiring indicators from the Sweet's headlines.
00:43: We've got a little something for everybody.
00:46: All of that for all of you, and I will not do any magic, I promise, after the break.
00:53: All right, indicators of the week, what do you have, Darian?
00:56: So my indicator is based in Italy where there's this kind of claditorial battle between
01:01: bankers and politicians going on. It's all about this plan to tax banks.
01:07: Take us to the Karlsium, Darian. I'm ready to go.
01:09: So a bit of background. The government in Italy is led by
01:13: by Minister George Rabeloni. She leads the Brothers of Italy party.
01:17: It has neo-fascist roots and came to power saying it would turn the Italian economy around.
01:24: The Italian economy is not doing great in March.
01:28: A million Italian households missed a mortgage or loan payment.
01:32: That is a lot of defaults.
01:34: Yeah, not doing great.
01:35: That sounds like not doing great.
01:37: And meanwhile, you've got Italian banks announcing strong profits this year,
01:40: like 60 or 70% more than a couple of years ago.
01:44: The banks have been charging higher interest rates for things like mortgages,
01:48: but aren't offering particularly higher interest rates to savers.
01:51: That part sounds vaguely familiar to me.
01:53: I don't know.
01:54: Yeah, yeah.
01:55: It's happening all around the world
01:56: and it's particularly noticeable in Italy at the moment.
01:58: There is this golden goose out there announcing its wonderful golden eggs.
02:04: So on Monday, the deputy prime minister
02:06: announced a 40% tax on the difference
02:09: between what banks are earning this year
02:11: versus what they were earning two years ago.
02:14: That's my indicator, by the way, 40%.
02:16: And it's essentially a solid tax
02:19: on those extra profits that banks are making.
02:22: We know, with golden goose's, they are very sensitive creatures.
02:26: And now they're getting squeezed.
02:28: What sound does a squeezed golden goose make?
02:31: The sound they make is share prices tumbling 5 to 10% on one day, which is what happened on Tuesday.
02:37: There's this flurry of honking and panicking, and the government partly backtracked a little, like within 24 hours.
02:45: It kept the amount of money that it planned to take from each bank, basically roughly
02:49: halving what the government was gonna take in.
02:52: And so these worries now from business circles
02:55: about what it means for this government as a whole.
02:58: And watch next, it might do to try to snatch those golden eggs.
03:03: Well, a tail as old as time.
03:06: Kenny, do you have another yarn you wanna spin here?
03:10: I mean, it's not as good as that one.
03:12: I wish I would have been.
03:13: Oh, I doubt that very much.
03:14: Lay it out as Kenny.
03:15: But here's what I do have.
03:16: I have an indicator, this sort of like opens up
03:19: like a little nesting doll into a second indicator.
03:22: Are you ready for that?
03:23: Are you caffeinated as your brain prepared for two indicators?
03:26: I'm prepared.
03:27: Okay. Oh yes.
03:27: All right, we'll see.
03:28: We'll see.
03:29: So indicator number one, imports, stuff coming into the US.
03:34: And we got new numbers from the Commerce Department
03:36: this week that show, so far this year,
03:39: imports are down about 6% compared to the first six months of last year.
03:46: And that's fine.
03:46: find there is a super easy story to tell here.
03:51: We've been emerging from pandemic hibernation.
03:54: We were spending more of our money on eating out and vacations and other things
03:59: that don't have to be imported on a container ship.
04:02: And here's where the second indicator comes in.
04:04: It's hidden inside those import numbers.
04:07: And if we look just at imports from China,
04:10: those are down way more than just that 6%.
04:13: They are down 25%, Darian and Whalen.
04:17: Oh, wow.
04:19: Is this the kind of decoupling that we've been hearing about?
04:22: Well, Darian, yes.
04:24: It is reasonable to conclude that that giant drop
04:27: is not just about us emerging from pandemic hibernation.
04:30: And in fact, some commentators have suggested
04:33: that perhaps that number is more about the US and China seriously beginning to decouple, to break up, if you will.
04:42: So this generally makes some sense, the decoupling, because tensions have been rising,
04:47: you know, the start with the Trump administration implementing all those tariffs, and then Biden administration and Congress
04:51: have cracked down on things like tech investment
04:54: in China and selling US microchips to China.
04:56: And so it is possible that this giant drop-in imports,
05:00: it's a sign that American companies have started
05:02: to move their supply chains away from China,
05:05: away from the turmoil, away from the risk, which for talking about a breakup,
05:10: I think of as us starting to move our stuff out of China's apartment, our toothbrush,
05:15: our sneakers, our TV, all things that might actually have dropped in important numbers
05:20: though I have not had time to check.
05:22: So we'll keep it as a metaphor for now if that's all right.
05:25: Now I will say it's possible that we are moving towards a little bit of a little love triangle situation here, whale and indarian because-
05:33: Oh, now I'm intrigued.
05:34: I figured you would be.
05:36: Because the US has moved away from reliance on China, we of course have been co-zying up
05:41: to countries like Mexico, Vietnam, India to help sort of fill our supply chain needs.
05:48: Well, guys, do you want to guess who else is economically flirting more with those same countries?
05:54: Want to guess?
05:55: Want to guess?
05:56: It's China.
05:57: China is also calling them.
05:59: Oh my goodness.
06:01: So, you know, it feels a little bit like there is definitely an economic soap opera to be
06:04: You're written in our future, Whale and I would not mind
06:06: if you right and direct that one, but.
06:08: Oh, I would be delighted.
06:09: But that's for later.
06:10: That's for later.
06:11: I know you have an indicator today.
06:13: Oh, yes.
06:14: And I am going to bring us back to the US.
06:16: My indicator is $1.62 billion.
06:21: That is what the private equity firm KKR is paying for the publisher Simon and Schuster in a deal announced this week.
06:28: So the world of publishing is dominated by five companies creatively known as the Big Five.
06:33: And Simon and Trister is one of those five.
06:36: It's the home of huge best-selling authors, like Stephen King and Colin Hoover.
06:41: I'm currently reading a new thriller by the author Ruth Ware.
06:45: I stayed up so late reading it the other night.
06:47: She's also a Simon and Trister author.
06:49: Hold, wait, did you just pick this
06:50: so that you could talk about a book recommendation?
06:53: Is that the entire reason you did this?
06:54: You did it, right?
06:55: I only ever want to talk about books I'm reading, so yes.
06:57: Okay, fine.
06:57: All right, I have actually another book recommendation,
07:00: but it relates to the Simon and Trister acquisition. not just me doing book club.
07:04: So this is not a new release, this is a classic from 1990.
07:08: Maybe you've read it,
07:09: Barbarians at the Gate.
07:10: It is a seminal work of business journalism by Brian Burrow and John Heller.
07:14: And it's this epic Wall Street tale
07:16: about what was then the largest leveraged buyout deal in US history, $25 billion.
07:22: And guess what, KKR, the private equity firm that just acquired Simon and Schuster,
07:27: they were the buyers in that big deal that's documented in the book.
07:30: Oh, I smell update to barbarians at the gate.
07:34: Gonna be good.
07:35: This deal was like not quite as fraught
07:37: as what happened in that book, which was like pretty wild.
07:40: So KKR is buying Simon and Shuster from Paramount, the big media conglomerate.
07:45: And Paramount had been wanting to offload Simon and Shuster for a while.
07:49: You might remember that it tried selling it
07:51: to Penguin Random House, another big publisher.
07:54: And then the Department of Justice sued
07:55: to stop the deal on anti-trust ground.
07:58: because do you remember Stephen King came in and testified on behalf of the government?
08:02: Yeah, I mean, I think we all know that monopoly power is what happens when you live on a pet cemetery, right?
08:09: That's the, isn't that what happens?
08:12: Yeah, that's exactly what happens in the novel.
08:14: So is this going to get blocked by the Department of Justice?
08:18: We have to see it still needs regulatory approval, although the DOJ's big objection to that other deal
08:24: was that it was going to be too much publishing power concentrated in one company.
08:29: And in this case, KKR is not another big publisher. People are often critical of private equity
08:35: in general. They worry that when these Wall Street firms come in, they start making all these cuts
08:39: and they lay off everyone. And one thing that's interesting about this deal I read is that KKR is
08:44: trying to, I think, assure Simon and Shister employees that they're going to be kind, you know,
08:51: not the barbarians of the past, but a kinder, gentler owner.
08:55: And so they're actually introducing an employee stock ownership program
08:58: where workers get a stake in the company.
09:02: And this is apparently something KKR has done at other companies that's acquired.
09:05: All right, well that's better than hitting everybody private equity, logo, vest, or something.
09:11: Maybe they'll get those too as a bonus.
09:12: Yeah, yeah.
09:16: This episode was produced by Cory Bridges, an engineer by Maggie Liza. it was fact-checked by Sierra Haudes.
09:21: We can canon edit the show and the indicator production of NPR.