Does the bond market care about Biden’s election exit?
1Digest
The episode begins with a call to action for listeners to donate their cars to Marketplace to support their journalism. It then delves into the bond market's perspective on the upcoming US presidential election, highlighting concerns about a divided government and the increasing national debt. The episode explores President Biden's economic legacy, focusing on the impact of the Chips Act and other industrial policies on the US economy. It examines the risks associated with businesses relying on a limited number of software providers, using the recent CrowdStrike outage as an example. The episode provides a market update, focusing on the performance of CrowdStrike and Microsoft stocks, bond yields, and the impact of business investment on GDP growth. It explores the impact of Nvidia's success in the AI sector on the San Jose real estate market, highlighting the surge in demand and prices driven by the tech boom. The episode concludes with news of Boeing receiving orders for new jets and a final market update, including a brief mention of the upcoming GDP report.
Outlines
The Bond Market, Biden's Legacy, and Tech's Impact
This episode explores the bond market's reaction to the US election, President Biden's economic legacy, the risks of software monocultures, and the impact of Nvidia's success on Silicon Valley real estate.
The Bond Market's Perspective on the Election
The episode explores how the bond market is reacting to the upcoming US presidential election, focusing on the potential impact of a divided government and the increasing national debt.
Biden's Economic Legacy and the Chips Act
Heather Long, an economics reporter for the Washington Post, discusses President Biden's economic legacy, highlighting the impact of the Chips Act and other industrial policies on the US economy.
Tech Trends and Market Update
The episode examines the risks associated with businesses relying on a limited number of software providers, highlighting the recent CrowdStrike outage that affected numerous companies. It also provides a market update, focusing on the performance of CrowdStrike and Microsoft stocks, bond yields, and the impact of business investment on GDP growth.
Keywords
Bond Market
The bond market is a global marketplace where investors buy and sell debt securities, such as government bonds and corporate bonds. It plays a crucial role in the economy by providing financing for businesses and governments.
Chips Act
The CHIPS and Science Act is a US federal law passed in 2022 that provides billions of dollars in subsidies and tax credits to boost domestic semiconductor manufacturing. It aims to reduce reliance on foreign chip suppliers and strengthen US technological competitiveness.
Managed Retreat
Managed retreat is a strategy for relocating people and infrastructure away from areas vulnerable to natural hazards, such as sea level rise, coastal erosion, and wildfires. It involves a combination of buyouts, relocation assistance, and land acquisition.
Nvidia
Nvidia is a multinational technology company specializing in graphics processing units (GPUs) and artificial intelligence (AI) computing. Its GPUs are widely used in gaming, data centers, and AI applications, making it a key player in the AI boom.
CrowdStrike
CrowdStrike is a cybersecurity company that provides endpoint protection and threat intelligence services. It experienced a major outage in July 2023, affecting numerous businesses and highlighting the risks of software monocultures.
Gross Domestic Product (GDP)
GDP is the total value of goods and services produced in a country during a specific period, typically a quarter or a year. It is a key indicator of economic growth and performance.
Sea Level Rise
Sea level rise is the long-term increase in the average height of the ocean surface. It is primarily caused by climate change, which leads to the melting of glaciers and ice sheets and the expansion of ocean water due to warming.
Q&A
How is the bond market reacting to the upcoming US presidential election?
The bond market is concerned about the potential for a divided government and the increasing national debt, which could lead to higher interest rates and a less favorable environment for bond investors.
What is the impact of the Chips Act on the US economy?
The Chips Act is expected to boost domestic semiconductor manufacturing, create jobs, and strengthen US technological competitiveness. It is a key part of President Biden's industrial policy.
What are the challenges of implementing managed retreat?
Managed retreat is a controversial strategy, as it involves relocating people and infrastructure away from their homes and communities. It is also expensive and can be politically difficult to implement.
How is Nvidia's success in AI impacting the San Jose real estate market?
Nvidia's success has fueled a tech boom in Silicon Valley, leading to a surge in demand for housing and driving up prices. This is particularly evident in San Jose, where the median home price has reached $2 million.
What are the risks associated with software monocultures?
Software monocultures can create vulnerabilities, as a single flaw in a core piece of software can affect numerous businesses. The recent CrowdStrike outage highlights the importance of diversifying software options.
Show Notes
In the face of major news, some say the bond market can signal what comes next economically. But so far, bond yields don’t seem to be reacting to Biden’s dropping out of the presidential race. In this episode, what the crystal ball of the economy does care about in regard to elections. Plus, business investments outpace GDP gains, Nvidia employees cash in on the chipmaker’s hockey stick-shaped earnings growth and Friday’s CrowdStrike crash reveals a common cybersecurity weakness.
Table of contents
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