Marketplace - Big banks fare well in this rocky economy

Episode Date: July 13, 2026

Five major banks report earnings Tuesday morning, and analysts expect them to be rosy. Despite a volatile energy market and uncertain geopolitical climate, U.S. banks are turning strong profits. They’ve got AI investment and a booming stock market to thank. Plus, the inflation beat: Steep producer inflation could soon show up in consumer prices, economists aren’t sure how long overall inflation will stick around, and we check in with three small business owners ahead of the June CPI.Every story has an economic angle. Want some in your inbox? Subscribe to our daily or weekly newsletter.Marketplace is more than a radio show. Check out our original reporting and financial literacy content at marketplace.org — and consider making an investment in our future.Read the stories from today’s episode: Rapidly rising producer prices could spell trouble for the economyWhy are big banks doing so well in this economy?Prices may remain elevated well into next yearPrivate jets and fake phone notifications are all part of the "hustlebro" scam

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helping them anticipate disruption, reduce risk, and create value across their global value chains. Find out how to put agentic AI to work in your procurement and supply chain operations at gEP.com. What's the over under on the number of times I'm going to say economic data this week? I'm going to set it at 15 from American public media. This is Marketplace. In Los Angeles, I'm Kyle Risdahl. It is Monday. Today, this one is the 13th day of July.

Good, as always, to have you along, everybody. You know, there is a certain rhythm to economic data. The monthly jobs report comes out, with exceptions only for holidays, on the first Friday of the month. Updates to gross domestic product come out like a metronome, more and more specific about economic growth each time. And as surely as day follows night, the Consumer Price Index, which will be upon us tomorrow, is followed by the producer price index. Consumer prices are pretty straightforward, right? Prices for consumers. The PPI, though, is more complex.

inflation at the wholesale level, yes, but it measures prices that businesses are charging all buyers, businesses and consumers. And the thing is, as Marketplace's Justin Ho reports now to get us going, what happens in the PPI doesn't always stay in the PPI. Part of the reason why the consumer and producer price indexes have been moving up at different rates is because they measure different things. One of the big things is rent. That's a very big component of the CPI and that's not showing up in the PPI. Menzzi Chen is an economics professor at the University of Wisconsin-Madison. Over the last few years, rent growth has been slowing down. What's happening there, which is not at all incorporated in PPI, can drive a wedge between the two series.

All that weight the consumer price index puts on rent also means CPI isn't as affected by the cost of fuel. Consumers spend a lot of their budget on housing, and housing doesn't respond so quickly to the price of fuel. Laura Veldcamp is an economics professor at Columbia Business School. She says the producer price index is much more sensitive to energy costs, because fuel is such an important part of what producers do. Even if they're not buying fuel itself, maybe they bought apples or blueberries or shirts, but they had to be transported to the location where they'll be sold, and that transportation requires fuel. That added pressure puts businesses in a tough spot, says Matthew Miskin, with Manulife John

Hancock investments. They either get lower profit margins, or they have to pass this on to. consumers, and the question becomes, can consumers take on that higher price point? That's why inflation at the producer level can eventually hit consumers, especially for groceries, toothpaste, and other consumer staples. These are very low-margin businesses, so they don't have that much wiggle room to not pass the price on. But Ms.kin says businesses don't always have the pricing power to pass on rising costs.

They'll cut their variable costs to make sure that they're more. margins are as intact as they can make them. And so variable costs often include labor. In other words, a slower labor market, and that means less consumer spending. That's why it can be a bad sign when producer prices rise faster. I'm Justin Ho for Marketplace. Besides all that inflation data, one other thing we're going to get this week, it's Wednesday, if you'd like to mark your calendars, is the Fed's beige book, economic annex data from the Fed's regional banks. We're going to front run them a little bit, though, with some data of our own dispatches from three of our retail regulars on how they are dealing with the

economy. Kristen Tullheimer Bingham is the co-owner of Dean's Suites in Portland, Maine. This summer has been strangely good. For the first time, in many years, I'm happy to report that the cost of chocolate is holding steady. In fact, if we didn't have tariffs on what's called finished chocolate coming out of the EU, we'd actually be seeing a reduction in chocolate costs. Other products we use a lot of, for example, cream and sugar and butter are also fairly stable right now.

Shipping costs have gone up a bit and they might go up a little bit more in the second half of the year, but it's not looking like a huge increase. The stability of the chocolate costs right now will definitely make it more tempting to build up our chocolate inventory in the next month or so because, as always, who knows what will happen to the cocoa crop in 2007. One other small challenge, we did have the air conditioner stop working twice in the last month, which meant that we had no choice but to stop chocolate production. Thankfully, the AC came back on within a day or two. Tariffs are still a thing, gang.

Don't sleep on those. Kristen Tollheimer-Bingham, making chocolate with AC now, thankfully, in Portland, Maine. Wall Street today? Nope. We'll have the details when we do the numbers. The news out of the Strait of Hormuz today is that, A, it's still closed. B, the U.S. blockade of Iranian ports goes back into effect tomorrow afternoon. And C, that the president of the United States says the United States will now somehow be collecting a 20% toll, a tariff, if you will, on all the cargo passing through that waterway.

Details on that last bit, as you might imagine, completely absent. Not at all imaginary, though, is what all of the above has to do with the price of a barrel of crude oil. Brent North Sea up 9% on the day, West Texas, up 8.8. And while no, consumers do not buy crude directly. Refineries sure do, which is why they are thinking a lot right now about something called the crack spread. It's called a crack spread only because you take crude oil, which is a very massive hydrocarbon molecule. fuel and you break it apart to make these other products like gasoline, like diesel, like aviation fuel.

That's Tom saying. He's an assistant professor of energy finance at Texas Christian University. Those products he was talking about, the diesel, the aviation fuel, they have to be refined from crude. And in very simple terms, the crack spread reflects a refinery's profit margin. If I'm a refiner, very quickly, I run a calculation and to say, okay, hey, this is about what we can make by taking three barrels of oil and converting it into two barrels of gasoline and one barrel of diesel. These crack spreads are astronomical, historically speaking. Six months ago, crack spreads, $21. So says RBN energy. Today, $63. Also, and important, the straight of Rmuz is far

from the only factor in all of this. China is the world's number one importer of oil. And they're not importing a whole lot of oil because they build their reserves up. Global prices for refined products are also skyrocketing. Ukraine has hit refining capacity in Russia. Russia is an exporter of refined products. So there you go. There you go, indeed. But while refiners are making impressive profits right now, they cannot and do not count on that lasting forever.

Annamakolska is the head of analytics at CGCN. end group. Crack spreads can go one way or another, right? So oil prices and, you know, refining, refinery product prices are not known for their stability, particularly when geopolitical situation is not stable. And that instability, eventually, as it always does, is going to flow downhill and land right on you. If gasoline and diesel, which is used for tracking, is more expensive or jet fuel is more expensive. Things are getting more expensive to begin with, right? It is just indicator of how much your gasoline is going to cost for the regular person. For you, regular person, a gallon of gas will run you $3.87 on a national average today up $8 from one week ago. It's not just economic data we're

going to be getting this week. There is also going to be a veritable flood of information coming from publicly traded companies in the form of second quarter earnings reports. That's going to start in earnest tomorrow with something of a bank of paloosa, all the Wall Street biggies, and some of the second tier almost as biggies. This is, as you know, an interesting moment. Geopolitics and the global economy with it are unsettled. Oil prices and financial markets, too, are volatile. Which way inflation in this country and a lot of other developed economies as well as interest rates are going to go is far from clear. How are the big banks doing with all that?

Oh, just fine. Thank you very much, as Marketplace's Mitchell Hartman reports. The country's biggest banks, this economy is driving revenue and profits higher, says Lauren Cassidy at Founders 100 ETF in Dallas. The drivers of each of the businesses happen to be strong at the same time. That usually doesn't line up, but it has this quarter. Let's start with the capital markets. Here's Gabriel Hack at Moody's ratings.

So that includes investment banking, financing, and very strong trading volumes, especially in equity. Hack says that's down to the soaring stock market. The mega banks make money when investors buy and sell a lot. Meanwhile, there's an ongoing IPO bonanza generating hundreds of millions in investment banking fees, says Lauren Cassidy. So we had SpaceX, the largest IPO in Wall Street history, but we have Anthropic, Data Brinks, Andrew and Open AI all come in next. The banks are also lending for business expansion. We've had the AI build-out players that have very deep pockets issuing bonds, so a lot of revenue there.

Not all these trends are a sure thing going forward, though, says Keith Buchanan at Global Investments in Atlanta. As fast as the spigot turned on for some of the capital expenditures related to the AI buildout, that spigot can turn off pretty quickly as well. On the consumer-facing side of the business, that's lending, banks are making a lot of money from the high interest rates they can charge. But with inflation on the rise, Buchanan says more consumers could get in trouble. We have seen a tick-up in delinquency.

of credit cars and also auto loans. That's one of the first places you saw to see stress. You're seeing that concentrated in subprime bars. He'll be listening closely to see if banks report consumer credit problems are spreading up the income ladder. I'm Mitchell Hartman for Marketplace. What happens after you have one retail regular on the program? Well, you've got to have another.

Kalina Bruce runs Norlux Kendall Bar in Seattle. In terms of our costs, I would say that nearly every person, part of our business has increased in cost over the past few years from shipping, packaging, our raw materials, vessels, oils, et cetera. With that being said, we've had to absorb a lot of those increases. We've become more strategic in our purchasing and inventory, so we're very careful not to over order. We've also looked for ways to diversify our revenues. So our candle making experiences have become an even bigger part of our business that help offset some of the rising costs on the retail side.

We're taking things day by day. And especially for us as a candle business, the summertime is not our peak. A lot of people prefer to be outside rather than inside doing activities. So we're going out and doing more markets. We're

using those opportunities to grow our reach in ways that we may not be necessarily doing during other times of the year. Kalina Bruce, Noir-Lux-Kandle Bar, Seattle, Washington. Coming up.

We're trying to stay optimistic and keep doing what we do. Oh, you and me both, my friend, you and me both. First, though, let's do the numbers. Dow Industrial's down 138 today, that's a quarter percent, finished at 52,4998. And Azdak sank down 408 points, 1 and 610 percent closed at 25,0873. Can you go another way than sank down? If you're going to sink, you're going down, right? S&P 500 off 60 points, 8 tenths percent, 75 and 15.

Shares of South Korean chipmaker S.K. Heinex debuted on the NASDAQ this past Friday, down 9 and 3 tenth percent today. Their Korean shares posted their steepest one day declined in nearly 20 years, falling more than 15 percent. American competitor Intel, Franks 6 and a 10th percent on the day. Bonds down, yield on the 10-year T-note up 4.62 percent. Keep an eye on that. You're listening to Marketplace. This Marketplace podcast is presented by Tomorrow's Cure. If our health care coverage leaves you wanting to learn more about the innovations shaping medicine, tomorrow's cure is for you.

It's the chart-topping 2025 Ambie Award finalist podcast from Mayo Clinic. Back for a brand new season with new host award-winning journalist Lindsay Sievert, tomorrow's cure explores the innovations changing the health care landscape. Featuring conversations with leading physicians, researchers, and medical experts, The new season examines everything from AI-powered diagnostics and cutting-edge cancer therapies to surgical technologies in proving patient care today. Not sure where to start? Listen to the season premiere featuring MD Anderson Radiation Physicist Dr. Page Taylor and Mayo Clinic Radiation Oncologist Dr. Adam Holtzman. They discuss why carbon ion therapy is generating excitement in the medical community and what it could mean for the future of precision cancer treatment.

So go ahead. Follow tomorrow's cure on Apple Podcasts, Spotify, or wherever you get your podcasts. This is Marketplace. I'm Kai Risdal. We began today with inflation because for what one hopes are obvious reasons, the cost of living is in and of itself a key economic indicator. The problem, though, is that the number we're going to get tomorrow, the consumer price index for June, it's for June. And while it's all well and good to know what price levels have been, whatever damage they have done to your, personal bottom lines you have already been dealing with. One imagines that having at least an inkling of what price changes you'll be dealing with in three or six, maybe even nine months from now would be more useful. Here's Marketplace's Stephanie Hughes with a peek at what's coming down, the Consumer Price Index pipeline. American consumers have had to choke down a lot of big

price hikes recently. Not happily, right? But yes, we've done it. The consumer, on average, has done it. Morgan Stanley economist Michael Gapen says that tariffs and higher energy costs due to the war in the Middle East have already been baked into prices, and he expects inflation to fall to 3.3% by the end of the year. There's a period of indigestion, but I think we're, well, we're kind of at the peak right now, and we think we'll be on the other side of it going forward. But the off again, on again war in the Middle East and the elevated oil prices that have come with it, has Tausen economist Dariah Sarani worried about future inflation, even if the

conflict gets resolved to marr. The Iranians, they may basically launch a rocket at a ship for whatever reason. Now that they realize that they can do it, they feel that they can use it for leverage. Irani says this creates uncertainty for ships traveling through the Strait of Hormuz. And since their safety isn't guaranteed, shippers may have to pay more for insurance to account for increased risk. This could all trickle down to prices consumers pay. It's not going to be like, oh my God, this is so much. But it's just one more added cost.

Another source of inflation, the U.S. is dealing with worker shortages in certain industries. Specifically, ones where immigrants make up a big chunk of the labor force, says Bill Adams, economists at Fifth Third Commercial Bank. Shortages of workers in agriculture and nursing services, home health care services, daycare services, those are feeding through to inflationary pressures. And if inflation does go up, the Federal Reserve could increase interest rates, which means not only will goods and services be more expensive, but the cost of borrowing. will be too. I'm Stephanie Hughes

from Marketplace. Spend almost any time at all on social media and you will come across a certain kind of video. It's often a guy wearing designer clothes, sitting in say, a private jet or next to a sports car, bragging about

how much money he's making online, doing anything from trading crypto to managing real estate. And those guys say, if you pay them, you can learn how to get rich too. It's obviously a scam, but it can look pretty convincing. We're here in the private jet.

We're on our way to Abiza, got the passport, got the Prosecco. You want to be rich like us? You learn how to do journalism. You take our online course. Publish articles, you get subscribers. It's that easy. Follow us to figure out how to learn more. You can be rich like us.

Take our online course. Check out the dashboards. I'll show you. You want proof? I'll show you. That's Jason Kebler from 404 Media in a video he made as part of the story he wrote called How I bought a Private Jet by selling $10 subscriptions to 404 media. Just like he said, Jason shot that video inside a private jet, but that was only part

of the story. So we gave him a call. Jason, welcome to the program. Hey, thanks for having me. So that video that you shot, of which we played a clip in the setup there a second ago, why? What was the, how did you come to be sitting there making a video trying to sell subscriptions to 404 media? Well, I booked a photo studio in Los Angeles in a warehouse. And so that's not a real private jet. It was $60 an hour. But basically, I have been reporting on online scams and online influencers and what I've been calling hustle bros. The ways that they market themselves are they always take these videos and photos in really exotic locations. And they basically say, I've made all of this money. I took my private jet to this island somewhere. And they

they sort of use this to market almost always a course about how to make money online. One, I don't think these people are so rich or at least most of them are not. And so I started wondering, how are they doing this? And I found that they're larping is what they call it, where they're pretending to be rich. Little live action roleplay, right? Yes. And so I decided to do it myself. And it was quite fun, actually. Well, okay. So I have some reasonably detailed questions. The object here is for these folks who are making these videos, and by extension you, to fundamentally fleece people out of their money. Yes, yes. I've at this point now bought so many of these courses.

And so basically what happens is you go and you pay very often quite a hefty fee. It's often like $30 or $40 a month. And you usually gain access to like an AI generated PDF. you usually gain access to like a Discord, which is, you know, a chat app community where, you know, there are some tips as to how to do whatever it is. The course is promising to teach you how to do. But very often it's not anything you can't find on YouTube in five seconds. Like it's usually quite low quality. The other thing that struck me about this piece, just to drill down a little bit, or this whole industry, I suppose it is, is the infrastructure behind it.

like you were able to set up and display for your would-be customers in that private jet, completely fraudulent, you know, numbers of subscriptions to 404 media that you had sold and how much revenue you're generating, all that stuff. And that's all back-end, more bogus stuff. Yeah, in a lot of the videos, they show what's called the dashboard. And that dashboard refers to the analytics page for a given platform. So on YouTube, if you are a YouTube creator, you can show like, here's how many views I got in the last month and here's how much revenue it brought me. And I was served a TikTok one day that was selling fake dashboard software.

It was software that was made to look exactly like the back end of Stripe, which is a payment processor platform or YouTube or Shopify. And these were fully editable. You know, you could click and drag the charge to make. make it look like you're making tons of money. I found a fake notifications app. It's an app that you install on your phone. Right. You click a button and all of a sudden dozens of notifications will stream in that will say,

new subscriber, new subscriber, new like sale. This is how like a lot of sort of the fake videos are being created by using software like this. So the lesson here, just as a way to bring it home, is never, ever trust anything you see on the internet. Yeah, I mean, when I first saw this like fake dashboards, at first I was like, oh my God, I cannot believe someone is lying on the internet. But of course, and then I got over yourself. And then I got over myself. But I was quite surprised by how easy it was to make it seem as though I lived a very luxurious life. Whereas, you know, when I was filming this video, I was stuck in traffic in L.A. for hours and I was like in a bad mood. And, you know, it wasn't as glamorous as I made it. out to be. Yeah, life never is. Life never is. Jason Kebler at 404 Media. Jason, thanks a lot. Crazy peas, man. Thanks for having me. Three is a trend, right? It's true in life and it's true in

retail. Dylan Demery owns the fly fishing shop. She's Fly in Fort Collins, Colorado. It's better than I thought it would be this year, mostly because we did consciously make a transition from retail to retreats. So we've reduced our retail footprint significantly this year. The prices on everything across the fly fishing industry have pretty much increased because of the tariffs and all the issues we've seen. Gas prices increasing, shipping costs increasing. So really trying to offer only items that you can't typically get everywhere that maybe women might search for and they have a hard time finding. We try to offer some of those. We've also seen some pretty difficult trends in the outdoor industry in Colorado and the West in particular

because of the severe drought that we're under. But we're trying to stay optimistic and keep doing what we do and just hoping to get some relief in the drought and hoping to get some relief on prices across the board. Dylan Demmery selling some gear and doing some retreats at She's Fly in Fort Collins, Colorado. This final note on the way out today, which comes with all due respect to the guardians of interest rates at the Federal Reserve, but also with the observation that central bankers aren't often known for their lighthearted take on things. Fed Governor Christopher Waller does get some points today, though, talking about what else? Inflation in a speech today in New York.

Waller said the central bank's got to be ready to raise rates if it has to. Here's the quote. Sternly staring at inflation, he said, until it melts before our withering gaze is not an option. I don't know. I thought that was pretty good, but maybe that's just me. CPI tomorrow by the buy, the buy, only one utterance of the phrase economic data on the program today for playing along at home. A member of our week, Caitlin Ash, John Gordon-Noyek, Carr, Steve Mullis, and Stephanie Seek are the marketplace editing staff.

Kelly Silvera is the news director. and I'm Kyle Rizdahl. We will see you tomorrow, everybody. This is APM. Amy Scott, host of How We Survive, a podcast about the messy business of climate solutions. To a lot of people, geoengineering might seem like a dangerous, outlandish way to play God. But some are embracing this sci-fi-inspired approach as a solution to the climate crisis. We're going to launch some balloons and send them into this stratosphere. A constellation of sunshades would cast an even dimming of shade across the entire Earth.

Investing that much in building anything in space creates a whole space economy. Listen to how we survive on your favorite podcast app.