Odd Lots

We all know that US Treasury yields have been surging, alongside bond yields all around the world. So what explains the selloff and does this mean that bonds are becoming fundamentally riskier? What happens if investors can no longer hedge stocks with government debt? And how do expectations of the Federal Reserve's "reaction function" fit in? In this episode, we speak with Carolin Pflueger, associate professor at the University of Chicago and a resident scholar at the Chicago Fed Bank, about her work on the bond market and central banks. We discuss why bonds have become more stock-like, what that means for yields, and the role of the Fed's credibility in making bonds “bond-like” again.

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Fuel is a huge expense for airlines, and even on a good day, jet fuel prices are pretty volatile. Throw in two major wars now effecting energy infrastructure, and fuel prices across the board are higher and higher. Airlines have long tried to manage this expense through fuel hedging, using things like swaps and options to hedge against future increases in the price of jet fuel. David Kang, former group treasurer at Qatar Airways, has firsthand experience hedging for a large carrier, and he tells us exactly how it all works. He also explains why airlines use heating oil as a proxy for jet fuel, how much they can make by raising ticket prices and fuel surcharges, and why airlines and oil refineries aren't so different.

Read more:
War Exposes the Cost of the West’s Retreat From Oil Refining
JPMorgan and Goldman See Mideast Oil Flows Near Pre-War Levels

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The market is acting in ways that make it very hard to get a handle on what exactly is going on right now. The overall indices are surging, while many individual stocks are doing badly. Rates are rising, but the economy is still robust. There's capex spending and the AI trade. There's the war in Iran. And of course there's persistent inflation and the Federal Reserve's ongoing tightening cycle. On this episode, we speak with our former Bloomberg News colleague Luke Kawa, who is now head of markets at Sherwood News. We go over all the big market themes, and he explains why the one consistent theme of this moment is the sheer speed of the moves and the pace of the news itself.

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Bill McBride did not just predict the 2008 housing bubble, he helped invent financial blogging with his Calculated Risk newsletter. Zach Lasry, meanwhile, is much newer to the scene, but in his career as a real estate developer, he is already responsible for building one of LA's hottest new neighborhoods — Melrose Hill. We spoke to both of them at our live show at the Vermont Hollywood, for a wide-ranging panel discussion on LA real estate. We talk about the difficulty of sourcing construction components, the Kafkaesque process of getting a crosswalk built in LA, and how self-driving cars might help reshape the city and solve its longstanding issues with parking.

Read more:
Mortgage Rates at 7% Are Forcing Home Sellers to Slash Prices
AI Data Centers Release Heat, Posing New Problem for Cities

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Is Hollywood just screwed? Writers are earning less. There are fewer shoots taking place in Los Angeles. And people are freaked out about AI. But according to Hayes Davenport, things were starting to feel bad in Hollywood before chatbots showed up to the scene. Davenport — who’s written for shows like Family Guy and is now creative director of LA Material and the co-host of the fantastic Hollywood Handbook podcast — joined us on stage at the Vermont to give us a history lesson on Hollywood's steady decline from the pandemic to now. We also get into the changing norms of AI use among entertainment professionals and why Davenport is jealous of New York right now.

Read more:
Jon Voight Spent Months Courting Trump on Tax Help for Hollywood
Paramount to Settle Lawsuits, Paving Way for Warner Bros.

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Social media is really strange these days: Increasingly, our feeds are starting to look uncanny, as AI slop proliferates all over the Internet. And for the professionals who are tasked with making content, whether it is social media managers or creators, it has been a head-spinning time of change. In this conversation, recorded at the Vermont in Hollywood, we get a primer on social media's AI era with two veteran Internet commentators, Rachel Karten (social media consultant and the author of the Link in Bio newsletter) and Taylor Lorenz (founder of User Mag). We discuss why people are afraid to admit that they love some genres of slop, why the AI discourse is evolving so rapidly, and whether our time online is moving away from scrolling feeds to engaging with chatbots.

Read more:
US Rebukes Australia for Plan to Target Social Media Algorithms
Meta’s New Muse AI App Tops Charts, Draws Strong Reviews

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The story you hear nowadays is that America is struggling to make things and can't compete with China when it comes to advanced manufacturing. But of course, there's tons of high-tech stuff being produced in the US, and more and more companies are doing it out of Southern California, with factories sprouting up around Los Angeles to build things like precision metal parts and jet engines. Two founders who are actively engaged in building things in LA are Tom Mueller, founder of Impulse Space (and Employee No. 1 at SpaceX), as well as Hadrian founder Chris Power. Impulse Space is building in-space transport vehicles while Hadrian is creating autonomous factories. This episode, which was recorded live at the Vermont Hollywood, is from our first ever Odd Lots live show in LA . We talk to Chris and Tom about how the US lost its manufacturing edge and why LA is becoming a destination for people who want to make and build hardware.

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We're in an era of megadeals, with Goldman Sachs reporting a record year for big deal volumes as companies scramble to compete with AI. Gene Sykes has seen multiple deal cycles come and go over his multi-decade career. The co-chair of global mergers and acquisitions has worked on famous transactions like Comcast's purchase of Universal and Disney's buyout of Pixar. In addition to being "the most-influential M&A banker you've never heard of," as New York magazine has put it, he has also spearheaded Los Angeles's successful bid to bring the Olympic Games to the city in 2028. In this conversation, recorded live at the Future Proof Festival in Huntington Beach, California, we discuss how a city pays for a big event like the Olympics, and parallels between the early 2000s TMT environment and now.

Read more:
Port of LA Foiled Around 120 Million Cyberattacks Last Month
Goldman’s Snider Says Fears of US Earnings Bubble Are Misplaced

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In 2014, the economists Owen Zidar and Eric Zwick were asked by the Treasury to conduct a study on the tax burden of private business owners. It was tricky to figure out how much these sorts of business owners — auto dealers, contractors, the like — actually owed in taxes: After Reagan's 1986 tax reforms, pass-through businesses and other accounting tricks became widespread enough to obscure this class of wealthy Americans hiding in plain sight. The research they conducted led to their new book The Everywhere Millionaire: Who Is Really Rich in America and How They Got There, and one of their central findings is that there are about three million private business owners who have an average wealth of around $25 million. They call this group “Main Street Millionaires” and their influence on the economy and politics in the US is considerable. We speak with Zidar and Zwick today about how they measured the actual number of rich people in America by sifting through reams of tax forms, why income inequality started to rise in tandem with the growing number of pass-through businesses, and how it's possible that the collective revenue of the nation's dentists far exceeds that of the NFL.

Read more:
Tech’s New Rich Are Suffering From ‘Sudden Wealth Syndrome’
Jobless Tech Workers Are Being Left Out of San Francisco’s AI Boom

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