Tale as old as time: Indicators of the Week

00:01: NPR.

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.

01:36: Yeah.

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.

04:18: 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.

06:00: Yeah.

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.

07:53: Yes.

07:54: And then the Department of Justice sued

07:55: to stop the deal on anti-trust ground.

07:57: Yep.

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.