Bulwark Takes - Catherine Rampell & JVL on Oil Price Spikes, Awful Inflation, Record Debt | Receipts Live

Episode Date: May 1, 2026

Catherine Rampell and JVL went live to discuss the week's economic and financial news.For a limited time, listeners can get an exclusive $25 off AuraFrame's best-selling Carver Matframe at https://on.auraframes.com/BULWARKTAKES with code BULWARKTAKES.Tickets for our Bulwark Live shows in San Diego and Los Angeles in May: https://thebulwark.com/events

Hello, friends, as Jim Nance would say. I'm JVL here with my bulwark colleague, Catherine Rempel, author of our receipts newsletter, the best newsletter about economics that you'll find anywhere on these internet tubes of ours. Catherine, happy 60th day of the war with Iran? I feel like happy is maybe not the right word I would use. Okay. I would say, it's like on Yom Kippur, you don't wish someone a happy Yom Kippur.

You say like have an easy fast because it's a very grave event. I feel like for this milestone in the war, maybe it's have an easy 60th day of the war. Okay. Something along those lines. Maybe. Maybe. Maybe. But if you're a fan of personal account.

as I am, then this is a really a great day, a day of learning, possibly a day of atonement. And because this week, gas prices have gone to the moon. We show people the national average from AAA. Now, these are pretty big numbers. You know, when you're seeing nine cent jumps day on day, that's pretty. Pretty rough. But when you look at the last week in certain states, Matt, show our gas buddy numbers here. Yeah. This is a one week change. Indiana, up a dollar nine. Ohio, where there is a Senate race, important Senate race coming up. 94 cents. Michigan, also an important Senate race.

88 cents. Again, these are one week jumps. Yeah. I, Kansas, another one. Yeah, yeah. Kansas. I said to my friend Sarah Longwell this morning that part of me wants to just drive, just point myself in the direction of rural America, stop at the first tractor supply I see, and just spend my Saturday afternoon, just wandering around the aisles, making casual conversation. with Trump voters and saying, boy, how about that diesel price, man?

I love it. So you don't want to go to the diner. You don't want to go to the diner. You want to go to the tractor supply store. I just want to just make conversation, rub people's faces in it, because they voted for this. Okay.

It is amazing to me and interesting. And I just, do you have thoughts on this? because my sense is that the worst is still to come, because even if we wrap up the whole war tomorrow, which, spoiler, we're not going to, we're looking at months and months to work out supply chain problems. It certainly, yeah, I mean, it certainly seems that way, because even if, as you point out,

if the war ended tomorrow, if the straight, which is already open but closed because it's shodering or straight or whatever, if that were actually open tomorrow, you would still have what analysts have called the air gap, where there was like a bunch of oil that didn't get produced, right? Because countries were running out of storage. So you still have that gap in production that companies would have to make up for, and that would last a while. And none of that seems likely to happen anytime soon anyway, because, in fact, the war is still ongoing.

and the straight is still closed. Yeah, so it does seem like it's going to be a problem. What's been interesting is that some of the measures that you would think might be happening to account for that. Don't go jumping the gun on me to the stock market. Oh, no. I was going to go to the stock market. We're saying that for later.

I was going to go to something a little more obscure, at least perhaps for our audience, which is the rig count, which I think we also have here. Oh, yes, please. Okay, so this is from Baker Hughes, and this chart shows how many oil rigs are in operation in the United States. They also track natural gas as well, natural gas rigs. And so you can see, if you kind of squint here, that we have exactly as many oil rigs here in the United States pumping oil today as we had the day before the war began. And in fact, we have many fewer oil rigs. than we had a year ago, also under Trump.

So, in fact, like you can see this big slide through, you know, basically the second half of 2025. What about 2024 when, when Joe Biden was president? It looks like the number was higher. I mean, it was. Drill baby drill. Up during. I'm so, Catherine, I'm so confused.

I know, I know. Drill baby drill was actually. happening under Biden. And we have seen a little less drilling, at least in terms of the number of rigs. I mean, like how much oil gets pumped at each place can vary. And so I don't know, I don't have the exact production numbers in front of me right now. But in general, you can see that whatever this massive oil boom that Donald Trump said he was going to unleash, that did not happen. That has not materialized. And it's still, maybe somewhat perplexingly, has not materialized since the war began. And maybe it's not so perplexing because it takes a while

for, it takes a while for companies to figure out, okay, is it worth making this investment? Do I get the capital equipment? Do I, you know, hire all of the workers and do all of the other, get the financing lineup, whatever, all of the things that they need to do to actually respond to something like a major supply shock? And a lot of them are maybe still kind of skittish. They're making a fair amount of money on the oil that they're already pumping. So maybe they're nervous about getting over their stees. Why invests more capital when your profits are going up on your existing production? Well, I mean, they still want, they still want a risk.

Right, exactly. I mean, they still want as many profits as possible, right? Their profit maximizing. But also, you would drive down prices. Yeah, I mean, it's a little more complicated. Yeah. I would say. I mean, yeah.

So, anyway, I think this is interesting. Yes. Yeah, we should look on the bright side here, though, because as the president said, this war is not yet as long as either Vietnam or World War I yet. And so there is plenty of time between now and however long, this little lovely excursion will be. Excursion. Scourish.

We are going to still. We're going to talk a little bit about what we're seeing with other indicators, especially with inflation. you are now starting to see the fuel prices showing up in the inflation data. We have some new stuff this week. But before that, I would like everybody to sit back and enjoy some lovely Republican-elected messaging on gas prices. You can even feel in our environment how good things are getting. Gas prices continue to come down, which means that your groceries will come down a little bit as well. It's terrible that we have higher gas prices, but the tradeoff is we're going to live in freedom and democracy, and we don't have somebody that's a lunatic that's going to drop a nuclear weapon on us.

What kind of greed do you give the president with gas getting up near $5 a gallon? And it has to do with the greed of the oil companies. We buy zero oil from Iran. 90% of their oil, they sell to China, and they're just gouging this. And I blame Congress. Can you tell me a little bit about the greedable oil companies, Catherine? Oh, my God. I have so many other thoughts before I even get to the greed of oil company.

Sure. Which is that like, don't forget the, don't forget the greed of those. I won't. I won't. I won't. I won't. I will believe you, me, that is one thing that I never forget. Yeah, I just think that the Scots should get together and coordinate on their messaging because

either gas prices are down according to Tim Scott or they're up, but it's worth it, according to Rick Scott, and they just haven't quite figured out how to make those arguments compatible. It feels a little bit like the talking points didn't get circulated quite on time. Not to mention the fact that indeed gas prices are up, as you just pointed out. Yeah, the greed of oil companies. This is kind of like the last refuge of scoundrels. Every time we see an increase in gasoline prices. not just under this president, but under Biden.

And basically all of the administrations for the few decades leading up to that, the president always says it's about greed or launches some sort of antitrust investigation. It's about collusion, like greed and collusion and anti-competitive behavior. They all kind of get conflated. The reality is companies are always greedy. They are always, if by greedy we mean profit maximizing, as we've been discussing. the thing that allows them to actually realize that greed or realize that profit maximization is a difference between supply and demand.

And when you have a major supply shock, i.e. a bunch of oil getting taken offline, whether that is right now because of the war with Iran or in 2022 because of Russia's invasion of Ukraine or in whatever it was 2005-ish. with Hurricane Katrina. In all of those cases, you end up having the same amount of demand chasing a much smaller set of supply, and that drives prices up. It's not some mystery. It's not necessarily some big conspiracy. There are times when companies do things that are illegal and anti-competitive and they do price fixing or whatever. But in these kinds of circumstances, It's relatively easy to pinpoint what the problem is, and it's a mismatch between supply and demand.

And every time the FTC goes chasing after some sort of, you know, collusive allegation, they're, you know, investigating why gas prices are high in the Gulf area during Katrina, in the aftermath of Katrina, or today, as is the case, because Donald Trump has sent them on a wild goose chase here as well, they always basically find out that nope, it was just supply and demand. Again, not to say that we should allow bad behavior when it does occur when there is some sort of collusion going on, but that's not what the case is here. However, the supply and demand explanation might potentially implicate things that this president has done, i.e. started a war that caused a massive supply shock. So of course, it's much easier to scapegoat corporate greed. And the American people love to rail against corporate greed.

So it's like the kind of sloppulism that the public eats up. And again, it's not like entirely wrong. The companies are greedy. They are definitely greedy. They're just always greedy. It's not like there's a sudden spike in demand. I mean, excuse me, spike in greed. You know, so anyway, yeah.

Well, what's funny, of course, is that the energy sector is the one sector where there is a great deal of open collusion because the OPEC is an oil cartel. That's true. It's just that in this moment, the cartel is powerless. This is not a collusion problem. I mean, if it is, it's a collusion problem where the collusion is between the United States and Israeli governments to prosecute this war. And it's not the actual cartel, the established cartel, which votes about how to regulate their supplies and whatnot.

And the cartel is losing members right now, right? Because there's not a lot of advantage to keeping a cap on production, which is the primary function of that cartel. It's right. It's a cap production so that they could keep prices high. Right now the problem is not that production is too high. It's that it's too low and nobody can get their goods out. So we are going to have some political consequences from this, God willing.

And Harry Enton did a little riff on this today where Trump is now being blamed for gas prices to an insane degree. 77% like more so than George W. Bush during the height of the Iraq war. And he, I'm sorry, I can't find this, but I have somewhere else dug in my numbers here. People are blaming, like it isn't, like he's being blamed across the board by Republicans, independents and Democrats, which is a, as Harry Anton called it a rare trifecta. So that's kind of exciting. And I, this is why, I say it's exciting because I, you, you, If you believe that if you're not a neelist, right,

neelists believe none of this matters and like people are just idiots and they do what they're going to do, if you believe in democracy, then you have to believe that there are electoral and political consequences for manifestly bad real world outcomes. And as somebody who basically believes in democracy, I am excited to see the theory of democracy upheld by there being political consequences. for what has happened. So that's why I'm in favor of this. That's why you're good.

Because I'm not a nihilist. Of course not. Of course not. I would never accuse you of such a thing. See, because I'm an optimist. Because I'm a humanist, really, at heart. I think what's interesting here to me is that normally when gas prices spike, I find myself as a journalist trying to patiently explain

to patiently explain to people why it is not the president's fault. Because presidents... Right. Normally it isn't. Because presidents don't have a dial under their desk that turns gas prices higher or lower. They don't control global oil markets. I always, you know, I have like sort of the same lines that I normally trot out about how presidents get too much blame when things are bad economically and too much credit when things good economically and they just don't have that much power. That's what I've been saying year after

year after year, certainly during the Biden era, but also to a large extent during the, during Trump one, during his first term. And now kind of all of that is out the window because voters are right on his desk right now. There's a button that says make economy better and he won't press it. No. And really what I've learned is that presidents don't. don't have a button to make economy better. They do have a button to make economy worse. So that is the control that they can exert. They can't do a lot unilaterally. Certainly. So he can untoggle the make economy worse switch. So he flipped the make economy worse switch and he can unflip that if he wants to. Correct. Correct. But he just doesn't want to. Right. There's not that

much that a president can do, particularly on a very short time frame to improve economic conditions or even to lower gas prices specifically. You just saw those oil rigs, despite all of that jawboning, all of the, you know, the rhetoric about drill baby drill, you know, a new economic, or what does he call it, like a new energy golden age, energy independence, all that stuff that he's been saying, all of the deregulation he's been touting particularly in the fossil fuel industry. None of that has made really any difference materially for the oil industry or for energy prices. But what has made a difference is bombing Iran. Sorry, this is a cat who also has opinions on the energy crisis. And all that he has been able to do is basically severing these

global supply chains. That is a thing you can do. as president, as it turns out. And so in this one case, you know, even a blind squirrel finds a nut every once in a while, voters are correct to blame this president for high gas prices. It's not that like things were completely off base in the past, like with the Iraq war, for example, but for the most part, these are global commodity markets that presidents just have little ability to affect except to screw them up, it turns out. Okay. But the other funny, I mean, just to put final point on this, also there are things a president

can do to screw up an economy that can't be undone easily. Like you pass a piece of legislation that's changed. And then like, well, crap, you can't really undo that on a short timeline. I mean, you can, but it takes a long time. This is the rare thing where, again, he could just unflip the button. Just toggle the button. Stop war. Stop war.

Well, I mean, he can't right now. He can't really can't, right? Because he could. He would have to take a loss. The problem is. We would not be able to save face. That's very important. Except what's happened here is that the Strait of Hormuz has never been closed before.

And so markets have never really had to worry about it. But as I think we talked about maybe last week, it cannot be unseen. Markets now know this is a thing that could happen. So let's say we made some sort of deal with Iran, gave them everything that they wanted, stopped bombing, et cetera, et cetera. There is still now this latent risk that Iran could do this again. That is a new thing that Trump cannot take back.

So long the Iranians promise not to do it when we strike our deal with them eventually, then I feel like, you know, we can all rest easy. Listen, while we were talking, President Trump came out and actually had something to say about oil prices. Oh, no. Gasoline's high. Other prices are way down, but gasoline's high. But when this is over, you'll have a world without a nuclear weapon with Iran. If you allow Iran to have a nuclear weapon, the world would be in great jeopardy.

So we're talking about. As soon as the, as soon as the war ends, The gasoline prices are going down to the villages. So interesting, because we also lived in a world where Iran did not have a nuclear weapon 60 days ago. And in fact, we've lived our entire lives in a world where Iran did not have a nuclear weapon. I thought we also totally obliterated their nuclear capacity last summer. And we did that. It was totally and completely obliterated.

We're going to talk about the prices going down. The prices everywhere else. on everything else except for gas going down in just a moment. But first, we got, I'm sorry, we've got to take a brief pause for a word from our sponsor. Just one ad today, guys. So let's listen to that and we're going to come back and talk inflation afterwards. Boreg takes a sponsor by Aura Frames. Look, Mother's Day is coming up and this is the last holiday where you want to get caught flat footy. Trust me, I've been there. It got ugly. Thankfully, Aura Frames, digital picture frames are a complete layup of a gift because you can give your mom more of her favorite thing.

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Yeah, there you go. Okay. So core inflation for March up to 3.2%. That doesn't seem good. Is that good? No, it's not. Okay. And growth, which had been estimated beforehand to be 2.2%, which is also not great, came in at two, just a flat 2%. Is that good? Undershooting your growth expectations? No. Particularly since whatever the expectations are or were, the promises made by this administration were at least double, right?

Like not very long ago, I don't think we have the clip. I should have thought to line it up. But Kevin Hassett promised that we were going to have four or five percent growth this year. I remember that. We were on the show together, and he did that, yes. Yeah, yeah, yeah. And he's not the only one. You've had Donald Trump say something similar.

I'm pretty sure Howard Lutnik, the Commerce Secretary said something similar, probably Besson. I don't know. They've all made this pledge or prognostication, whatever you want to call it, saying that we were going to have just like gangbusters growth. Because of, yes, because of that energy boom, because of everything else that Donald Trump had promised about the economic gold age. And of course, none of it has happened. But I could have told you that we weren't going to get 5% growth. I'm not sure I would have guessed that we would have only 2% growth at the beginning of this year, particularly since this was supposed to be like the bounce back quarter after the government shutdown, right? So we were supposed to get a nice little boost there. And instead,

the only thing holding up the economy right now is continues to be AI and like data center construction So Trump first screwed up the economy with the tariffs, and then things were going to bounce back early this year, but then he screwed up with the government shutdown. And then things were going to bounce back this quarter from the shutdown, but then he screwed up with the war that he decided to start. It does feel like a lot of self-inflicted wounds on the country. Oh, 100%. As I was saying, the president cannot do a whole lot to make the economy better, particularly in the near term, but he can't. can do a lot to screw it up. And we are seeing own goal after own goal after own goal.

Maybe they should put a little emergency cage on top of his make economy worse button so he can't predict it. So I saw UBS had a report that they were now projecting headline inflation for May to come in at 4.3%. Again, this is just a guess. Who knows? That would be quite bad. And this is, Matt, if we can have the,

the graph on manufacturing prices paid. So this is, again, this is a, this is a measure of the costs to manufacturers as they're making stuff. And there's been a lot of eating increased costs by manufacturers and the resistance to pass it on. But at some point that you run out of runway for that. And, you know, the supply shock isn't short term enough. And you have to start passing.

costs long. And that's what this really suggests. We're now at the highest level in four years for this, which suggests to me that they're pretty soon going to run out of room to eat costs and have to start raising prices. So unlike what President Trump has said, Catherine, prices not going down everywhere on everything else? No, no, prices. I mean, first of all, prices almost never go down across the board. They go like there's some volatility from, you know, within particular items, like if there's a supply shock, gas prices go up, oil prices go up, gas prices go up, and then they may come back down to Earth. But the overall price level, sorry, this is like getting into Econ 101 lecture, which is maybe a little boring, but the overall price level

basically never turns down. If it does, it means like that would be deflation. That would be deflation. And it's bad. It's bad. It's not intuitive that it's bad. Everybody wants prices to be lower, but generally, like it happened during the Great Depression. Generally, it means that like nobody's buying anything and every company everywhere is just like having a massive fire sale just to beg people to come back in the door and start spending money again. We saw this in Japan as well, you know, during their lost decade. Anyway, deflation is not what you want. It is what Donald Trump promised what happened. It's what he claims is happening right now, not actually happening.

the thing you would hope for is just that like prices kind of plateau, not turn negative, not that like things go down, but they just like stop growing as quickly. Again, it's not intuitive. It's not satisfying to consumers or voters, but that's really what the Fed is hoping for. And we're not seeing that. We are seeing prices go up. Some of it is for reasons we can easily identify like gasoline prices, diesel prices, anything related to the oil shock.

but you're going to see some of that price increase from energy leach into other categories of spending, right? Because energy is an input into so many other things, things that get manufactured, just as one example. Literally everything. Yes. And anything you need to transport, obviously that's going to get baked into higher costs for that. And it's not just about energy. Fertilizer prices, as I'm sure people watching this know, have also been skyrocketing. We are, I guess we're past probably the beginning of planting season, but a lot of farmers are dealing with higher costs. We will probably see those higher prices a few months from now because of the, you know, because that gets passed along the supply chain down to higher costs for groceries at the, you know, for consumers.

So we will see some additional price increases not only about energy right now. it's largely about energy, but all of these other supply chains are also getting totally screwed up because of the war. And that's not something that Trump can hand wave away or Tim Scott can pretend is not happening. You know, people are going to notice. People will notice when they go to the grocery store and costs are higher or they try to fill up their tank and it's a lot more expensive or clothing gets more expensive. Anything that has plastic and it gets more expensive. Pharmaceuticals, which there are a bunch of chemicals and packaging and things like that that are dependent on supplies coming through the street over removes. All of those things are going to get more expensive

and we haven't seen it just yet. And that's partly because, like as you were saying, maybe companies feel like they can eat the cost for a little bit, for a little while, just as they have with tariffs. They're hoping things resolve themselves. But the longer that this goes on, the harder it will be for companies to keep on making that kind of justification. And the other thing we should consider is the way in which all of these poor economic choices kind of feed on each other, which is that, like, for example, Christopher Waller, who's one of the Fed governors, gave a speech a few weeks ago where he talked about how he was really worried about the one-to-punch of tariffs and this war kind of feeding into people's expectations about inflation, because we've, we've seen, you know, multiple waves of higher prices. And then that can kind of become a self-fulfilling prophecy, or at least a self-perpetuating cycle,

that if people start to expect higher prices, they've seen higher prices, they preemptively price their own goods, higher because they don't want to get caught off guard, you know, if they've already, like, listed a price for their purchaser somewhere, and then it turns out that their supply costs go up, So it becomes a self-perpetuating problem. And it's, it starts.

They're trying to frontrun their supply cost. Exactly. And so it starts with these bad decisions that are made by Donald Trump and the people around him. But then it kind of takes on a life of its own. And that's really the risk here. The thing that the Fed is trying to avoid. And we haven't even gone into like all of the drama over at the Federal Reserve.

That's where I want to go next. Yeah. Okay. Yeah. Sorry. Before we do that, I just note that the other thing that happened right before we went on air was that the president issued a new tariff. Yeah.

Oh, yeah. And so we, yes, he's pleased to announce that we're going to increase to 25%. But don't worry because don't worry, $100 billion are being invested or something. And it's a record in the history of car and truck manufacturing. and thank you for your attention to this matter. That's great. Can I just say before we move on from that? Sure.

I haven't had a chance to report this out. Can he do that, by the way? That's what I was going to say. Didn't we just have a Supreme Court decision about this? I thought we did. The Supreme Court said that the tariff authority Trump was using to just like tweet out changes in tariffs. The Supreme Court said he cannot use. He still has other tariff authorities, but they require.

a lot of other things to happen beyond just him tweeting something out. There has to be like an investigation and hearings and the Commerce Department has to get involved at all of these other things. So I don't really understand how he's doing this. Maybe right after we get off of this live feed, I will figure it out. But just planting that seed here, this may be completely illegal, unconstitutional, based on this prior Supreme Court decision. I don't know.

Maybe there's something else that I haven't noticed here. Sure. But Trump just does Trump. So the Fed seems to be split. You and I talked about this last week, about the possibility of a split Fed. And I have some sympathy for the Fed because, A, they're in a bind. We have a slowing economy and inflation. So we have stagflation.

It's not entirely clear what the right move is, right? Which is the bigger danger? Are the inflationary pressures more serious or are the slowdown pressures more serious? And so there's push and pull on that. There's also a prudential question about what is the best way to signal independence to the rest of the world. And so there's a prudential, like even if we think we have to cut rates, do we want to do that at the first meeting since Trump has demanded cuts? Maybe it's wiser to not do a cut at the first meeting and then wait on. Or which is it turns out to not be surprising that there is a split.

And can you just talk to people for a minute or two about what that means and what the dangers are? Because I look at this, and Larry Lindsay has a special newsletter that a little birdie forwarded to me because I'm not a big enough deal. You're not special enough. litter myself. And he said that, you know, the markets have not yet priced in the possibility that rates could go up and that rate hikes could be around the corner. And I just was like, what? But anyway, just talk for a minute about where you see the Fed right now and what the movement this week suggested to you about just the whole institution. Yeah. Okay. So just to comment on that one point about what Larry Lindsay said.

If you look at, at least I haven't looked this morning or today, but last night I was looking at where markets were pricing in the likelihood of various rate movements. And markets were not pricing in any sort of rate cut for the foreseeable future. So Kevin Warsh has promised publicly and perhaps privately to Donald Trump, although he denies it, that he would come in and slash interest rates. However, markets do not believe him. They don't think rate cuts are coming. And in fact, if you look, again, I don't have the numbers in front of me.

There's this, if folks want to look this up on their own, just Google CME group and Fed interest rates or something like that. And you'll see there's like a nice little chart. You can see what the probabilities are for different kinds of rate changes. And when I had looked this up last night, I believe that the chances of a rate increase by the end of the year were slightly higher than those of a rate cut. But the, like, the median forecast was still nothing happens either way. So anyway, just to put that in perspective. Yeah, that's what I'm saying.

Yeah. There are people out there. They really haven't priced in. Yeah, there are some people that the markets broadly have not priced in. they have not priced in, but they also are not pricing in rate cuts, which again is what Donald Trump seems to be counting on it and is, you know, the markets do not think will happen. So what happened yesterday. The Fed did what it was expected to do in terms of not changing interest rates. Again, that is what the typical forecast is that they will do for the next year or so, that they will just, you know, steady as she goes.

They're not going to cut rates. They're not going to increase rates. in part because, as you point out, they're in this bind with stagflation. Do they care more about inflation versus unemployment? Like, those things are what they would do to address either as intention. So maybe the best thing to do is nothing. So yesterday the Fed said, we're just not going to do anything. But then there's a statement that comes out when they say, we're not going to do anything

or that we're not going to change rates. And the statement says something about like, How do they view the economy? And they give some indication about whether they have more, whether they're likely to cut rates in the future. And the way that this statement is written, it's got a lot of, you know, jargon. But basically there's a, there's a sentence in there that the main takeaway is

they will have a bias towards cutting rates, a bias towards easing. And we had four dissents yesterday just over the language in the statement. Well, actually three were about the language in the statement. And one was Donald Trump's personal pick on the Fed, Steve Myron, who was the CEO chair under Donald Trump. He was doing both at the same time for a while. Steve Myron said he dissented because he thought that they should cut rates. He said that every time. The other three were dissenting because they just want that language taken out of their saying that they're going to have a bias towards cutting.

Because they're like, we don't want to signal to markets that they should. expect any rate cuts coming. We don't think that that's appropriate. So this was just, it was all just about what kind of forward guidance, what kind of, you know, messaging are we giving to markets as opposed to what we are actually doing today. And so that's part of the reason, you know, markets got the message. That's part of the reason why, if you look at the numbers, markets do not expect rate cuts because they're like, well, those three people were like so, you know, so strongly believing that this was not the right signal to send that maybe I'm going to take that signal and I'm going to say, okay, I'm not going to assume any rate cuts.

So that's what happened yesterday. Again, Kevin Warsh is likely to get confirmed as FedShare imminently. And he will have two big problems on his hands. One is that, again, he has promised rate cuts and the rest of the full, not the rest of the board, but several of the other members who are voting on interest rates have indicated, no way. You know, we don't even want to give markets a hint that that's going to happen. And Donald Trump is expecting otherwise.

And the second problem, of course, is Chair Powell. Chair Powell is about to step down as Fed Chair, because his term ends on May 15th. And rather than, you know, riding off into the sunset and enjoying his retirement, he has decided to stay on the board, as he is allowed to do, but pretty much no one ever does. It's only happened twice in history. And in both cases, it was, you know, pretty different circumstances. He has decided to stick around and stay as a regular member, despite his demotion. Most people don't want to do, but he's going to stick around because he is so worried about the Fed's independence.

And he said in his press conference this week, I guess it wasn't yesterday. It was, excuse me, it was Wednesday. All of this happened. He said on Wednesday at his press conference that he was sticking around because he was concerned about the Fed's independence, but he was not going to be any kind of like shadow Fed share. He didn't want people to think he was there to undermine Kevin Warr. She's just there because he thinks it's in the interest of the Federal Reserve for him to stay. And I think that's the right move.

He's showing that he has backbone. and he's showing that he can't be bullied. I've seen people suggest that like, oh, he just wants the resources of the Fed's lawyers in case Donald Trump comes back after him. And I guess that could be true, but it's not really going to last him very long because he can't stay on the Fed indefinitely. Even if he's staying longer than most people would, he still has to be out of the regular member position by, I think it's January of 2028.

and Donald Trump will still be in charge of the DOJ at that point. So if anything, he's probably just made Trump much angrier and he's still sticking around. So anyway, it'll be interesting to see how he and Warsh get along. I thought that Powell was very gracious in his comments about Warsh, not only because Powell said, I'm not going to be a shadow Fed chair. There's only one Fed share at a time and it will be Kevin Warsh and I respect that, blah, blah, blah. Powell was directly asked, do you think that, will protect the Fed's independence.

And Powell said he said he did under oath, and I will take him at his word, you know, which is the right thing to say. So I think a little, I don't know, I mean, could have said, absolutely, I know this guy. He's a stand-up dude. I mean, when I saw that answer, when I saw the, well, I'll take him at his word, I was like, oh, yikes. Oh, I didn't hear it that way. I didn't hear it as like a catty comment.

I heard it as like he's saying, you know, like I want to be, I want to act in good faith here and give him the benefit of the doubt. That's how I heard it. I would have said something probably a little cattyer because I thought that the other things that Warsh said when he was under oath were much more damning about his fealty to fed independence, including like not being able to say who won the election in 2020, not being able to say that it was inappropriate for Trump or Trump's DOJ to criminally investigate Powell. Like there are a bunch of things that I thought were much bigger red flags than the supposed

green flag of him saying, I support. I'm with you. I just think that from Powell's perspective, there is no percentage in preemptively saying Warsh might not be independent. Your absolute best play is to say, of course, he's going to be independent. I fully expect him to be. I know him to because then if he's not, you can then shift him later. Shiving him ahead of time doesn't do anything. And in fact, it lowers the bar for him. So that's why I was a little surprised. Yeah. I think also because I do genuinely

looking around because he cares about the Fed as an institution, undercutting public trust in the Fed's independence by saying then his success. is not trustworthy or whatever, I think would undermine that objective, which I genuinely believe is Powell's objective, is that he wants to protect it. We got to move through two other things. Very quick, though. So all this bad news, and yet the Dow Industrial average is up 11% since March 30th. We are right now today very near the Pam Bondi line.

Get Pam Bondi. We're close to Dow 50,000 again. Oh, yeah. Do you have any way to explain the Fed is freaking out? Oil is on the spot market at like $120 if you want to get a physical barrel of oil. Gas prices going crazy. Looking at 4.2% inflation for May. Growth slow below the expectations down to 2%.

Stock markets are like, build more data centers, bitches. Hey, I. Woo! I mean, this is why nobody should ever take financial advice for me, because I do not know what's going on. I do not understand why markets are persistently abelient despite the fact that, like, we clearly have a maniac in charge who is hitting the destroy economy button over and over and over again. I don't get it. I think, you know, one way to interpret it is that the. The band is still continuing to play for a little while while the Titanic is going down.

And, you know, like, just nobody wants to be the one who's like the last person not making money. Could be something to that effect. I don't know. You know, one reason to be nervous as I am about whether any of this is sustainable is that if you look at the long run relationship between stock valuations and the actual earnings of those companies. and I think we have that chart. This is the Schiller cyclically adjusted price to earnings ratio. That's right. Oh, that's one of my favorite charts.

Yeah. So I don't know why you're so gleeful. This is like terrifying to me. Consequences. Fair enough. So this shows for those who are not familiar with this chart, again, this shows the ratio between stock prices and the earnings of the underlying consequences. companies. And when the line is higher, that means that stocks look kind of overvalue, that the price you can

purchase a share at looks very expensive relative to how much that company is actually earning, how much it is making. And you can see right now, like we're, we're like, forget like the individual values, just where we are comparatively. Like, we're about where we were during the dot-com bubble. And look, maybe this time is different. famous last words. Sure. And there's something like that generally explains why these two things would become, this relationship would become untethered.

But another way to interpret that is that we have some sort of bubble today, just as we had during the dot com bubble. AIM bubble. AIM is going to change everything. I mean, you can also see like, look at some of the previous spikes. You can see a spike in the 1920s, right? Late 1920s, yeah, yep. Yeah, and a similar issue, that when these, when stock prices become untethered from fundamentals,

oftentimes that means something is about to implode. And I am not rooting for an implosion. I know you and I have different views. I wouldn't say I'm rooting for an implosion. I'm rooting for consequences. The problem is, of course, the people who bear those consequences may be. the people who are least equipped to handle them and are not necessarily to blame for putting this guy in office. If my cow dies, I can live with that so long as my neighbor's cow also dies.

This is to invert the Russian, the old Russian joke. Okay. Last thing. Yeah. Right before we hopped on, we had word that the bailout, the socialism, crony capitalism, bailout of spirit airlines was failing. And so, Spirit was just preparing to shut down operations in the next couple days. Looking to liquidate planes and all that, they don't have the cash. Apparently, it was the bondholders who blocked at the bailout. So Trump couldn't even do this piece of crony capitalism the right way. You know, one of my maxims in life is that the greatest delicacy that exists is seeing bad things happen to bad people. Because you don't see that enough in the world.

Oftentimes, bad people just skate through and, like, there are no consequences and everything turns out ducky for them. I think there's a version of that with bad companies. And Spirit is a very bad and despised company. It's probably the most hated airline in America, certainly. Is there something nice in seeing a bad company die? I mean, I won't miss Spirit Airlines. I think a lot of other people won't miss Spirit Airlines. I am mostly glad that $500 million of our taxpayer money did not get plugged into saving this failing airline, which was in trouble before.

It had filed for bankruptcy, I think, twice. Twice in two years. Yeah, exactly. So it had problems before. And then Donald Trump kind of like, you know, ham. hammered the nail in the coffin with this war because suddenly the fuel prices for this struggling airline got like just way, way, way too expensive. There was no way to get the books to add up. And so I am mostly relieved that my taxpayer dollars are not being used to not

just bail out Spirit Airlines, but bail out Donald Trump because that's really what this is about. He wants to use the Treasury as his personal piggy bank to sort of like clean up after the mistakes that he has made so that he can avoid accountability. It's the same way that he has offered bailouts to farmers because they've been hurt by tariffs. And those bailouts, again, are coming from our pockets, or at least the public fisc, you know, our taxpayer dollars. And so I am relieved that the market is operating as it should, rather than that the market is operating as it should, rather than having this mass intervention that pisses away my money, essentially, and shields this president from any sort of accountability. Okay.

So, I mean, I agree with all of that, obviously. But I would like to provide an alternative perspective. Okay. I mean, it's our money, but our money gets wasted by the government every day in a thousand different ways. What I am happy about is that the market is preventing some inshittification here. So Spirit was attempting to inshidify airline travel. And the market has spoken. And that is a small victory. Like, you know, everything is always getting worse. Not everything. Many things are often getting worse. As industry is mature, they inshidify. This is

somebody's written an entire book about this. And it is nice to occasionally see the companies trying to do the inshittification fail because what that means is that the market is rejecting it and it is upholding some small standard for consumers and those of us who would like to continue to purchase products that aren't shitty. All right. Catherine, this was great. Before we go, guys, go to the bulwark.com slash events. If you want tickets, we are going to be in San Diego on May 20th in Los Angeles,

May 21st. There's still some tickets available. Come and hang out with the gang. I will not be there, but Tim Miller will be, Sam Stein will be, Sarah Longwell will be, some very special guests. Go to the bulwark.com slash events. Catherine, a delight, as always. I feel like we need to make the cat a regular character. I mean, she honestly.

Did you have an cute-the economics name? No, her name is Doddy. She's named after Dorothy Parker. She, but she has invaded, not like, edit, da. No, that'll be the next one. Yeah, she has invaded many of my live takes recently, for which I apologize. Hopefully nobody out there is allergic. Apologize, you're kidding?

That's catnap, so to speak. People love that sort of thing. There you go, there you go. All right, everybody, enjoy filling up your tank. As I said to Sarah, I feel like that jerk who, when you're in the middle of a heat wave, is standing in line of the grocery store and just sort of says to no one and everyone, boy, is it hot enough for you? That's what I'm like with the gas prices.

Boy, how about them gas prices? Woo! I love it. Good luck, America. I'm sure everybody appreciates it. Yeah. Good luck. We'll see you next week.