Slate Money: The Car Talk Edition (December 1, 2018)

Episode Overview

In this lively episode, host Felix Salmon (Axios) is joined by Anna Szymanski and Emily Peck (HuffPost) for a roundtable on the business and finance news of the week—framed through the lens of mobility and the car industry. The trio covers General Motors' massive layoffs and shifting market strategy, the ongoing relevance (or irrelevance) of market capitalization rankings, and a primer on Federal Reserve independence amid political interference from President Trump. Their signature banter blends insight with humor, especially as none of the hosts are car enthusiasts, making for a refreshingly honest “car talk.”

Key Discussion Points

1. Why Is No One Buying American Cars? [02:36 – 16:58]

• GM and Ford Restructure:

  • GM announced plant closures and elimination of 14,000 jobs, shifting from sedans to trucks, SUVs, autonomous, and electric vehicles. Ford previously made comparable announcements (03:11).
  • Both companies are ceding the sedan market to Japanese manufacturers (Nissan, Honda, Toyota), focusing instead on higher-margin SUVs and trucks.

• Millennials and Car Buying:

  • Discussion that millennials don’t drive as much, supposedly hurting car sales (01:13).

• Market Forces and Plant Closures:

  • GM and Ford have excess plant capacity; auto plants only profitable at/over full capacity (05:23).
  • "The way you make money in the auto industry is by running auto plants at 100% full capacity." – Felix Salmon [05:47]

• GM’s Pivot to EV and Autonomous:

  • Felix argues GM’s focus on EVs is motivated partly by “Tesla envy”—chasing higher market multiples and investor excitement, not just consumer demand (04:15).
  • Emily critiques GM’s claimed commitment to electric vehicles, noting they’re ending the Chevy Volt (hybrid) despite its positive reviews (06:40).

• SUVs, Gas Prices, and Climate:

  • U.S. demand for large vehicles is tied to low gas prices. When prices rise, so do car and fuel-efficient model sales (07:36).
  • “GM coming out and saying stuff about electricity, electric cars and autonomous vehicles strikes me as just totally disingenuous.” — Emily Peck [07:19]

• Global Strategy:

  • Possibility that GM’s EV focus is more about Chinese (subsidized) demand than U.S. markets (08:22).

• Long-Term Bets and Climate Policy:

  • Companies are “getting out in front” of regulatory pressure and changing energy usage (09:06).
  • Uncertainties remain over whether returns on EV investments will materialize fast enough (09:38).

• Leadership & Vision:

  • Discussion of Mary Barra (GM CEO) as emblematic of a new, less flamboyant car exec era, juxtaposed against figures like Carlos Ghosn (Nissan, arrested) and Elon Musk (Tesla) (12:15–16:20).
  • “I feel so depressed that the only real visionary in the entire car industry is fucking Elon Musk.” – Felix Salmon [15:56]

Notable Quotes:

• “The statistic is two thirds of all new vehicles that were sold last year were trucks and SUVs. Two thirds. So we really aren't buying cars here in America.” — Emily Peck [04:42]
• “This is all Tesla envy.” — Felix Salmon [04:15]
• “When Americans don't care about gas prices, they like big gas guzzlers.” — Felix Salmon [07:39]

2. The Fed, Presidential Interference, and Interest Rates [16:58 – 29:24]

• Jay Powell and Trump:

  • Fed Chair Jay Powell signaled U.S. interest rates are close to “neutral”; Felix lampoons Trump’s public antagonism and lack of direct communication with Powell, contrasting with previous presidents’ behind-the-scenes pressure (17:56–20:21).

• Norms and Independence:

  • Anna Szymanski contextualizes Trump's critiques as “not norm-breaking”—presidents have always pressed the Fed, though Trump does it more publicly (18:23).
  • Emily Peck highlights how Trump’s behavior undermines public trust in the Fed as an institution, noting differences in tone and consequence (20:21).

• Central Bank Independence Over Time:

  • The group discusses how the global norm of central bank independence has strengthened since the Nixon era, making Trump’s attacks more taboo (23:02–24:18).

• Forecasting Fed Policy:

  • The risk of recession is higher than that of overheating; the rate-hike cycle may be ending (25:35–26:46).
  • Uncertainty remains over the “neutral rate”; global factors may lower the natural rate of interest (26:46–27:10).

• The Politics of Fed Appointments:

  • Janet Yellen’s ouster likely influenced by Trump’s preference for a different “look”; a Washington Post detail highlights Trump’s fixation on her height ([29:21]).

Notable Quotes:

• “Every other president...in general, when presidents have been unhappy about things Fed policy, they have tried to buttonhole the Fed chair...Trump hasn't done that. He just gives interviews.” — Felix Salmon [19:17]
• “I think we see this all the time...how crucial it is to keep monetary policy away from politics and how when it gets tied up together, disaster occurs.” — Emily Peck [22:02]

3. The (Non-)Meaning of Market Capitalization [29:57 – 40:37]

• Why Do People Care about Market Cap?

  • Felix questions the public fascination with market cap as companies like Microsoft threaten to overtake Apple for the top spot (30:11).
  • Emily suggests market cap stories appeal because they center on well-known brands and invoke the spirit of competition (30:46).
  • Anna and Felix debate whether a high market cap is truly “better” for companies or investors (31:27).

• Microsoft vs. Apple:

  • Microsoft’s rise attributed to its focus on enterprise/cloud computing and recurring revenue, leading to higher valuation multiples (32:46–35:07).
  • Apple’s model is riskier and more dependent on iPhone sales; there’s skepticism whether Apple can pivot effectively into services (36:06).

• Acquisition-Led Growth:

  • Microsoft and Cisco have grown by acquiring promising companies; Apple’s approach historically focused on profits, not market cap alone (33:31–35:03).

• Platform Stickiness & Tech Shifts:

  • Apple’s moat: iOS, high switching costs, privacy positioning. But Emily and Anna argue tech can “change overnight”—Nokia and Motorola lost dominance quickly (38:29–39:40).
  • Globally, Chinese competitors (Huawei, etc.) gaining foothold due to price/features, even as iOS vs. Android remains the core battle (39:38–40:33).

Notable Quotes:

• “Brands are like people to people, and Market Cap is kind of like an easy thing to wrap your head around. This company is worth this amount of money...It’s like a race or a football score.” — Emily Peck [30:46]
• “The iPhone is the only piece of technology that I can remember that has actually got more expensive over time.” — Felix Salmon [40:33]

4. Numbers Round [40:37 – End]

• Emily’s Number: $20,000 [40:41]

  • Annual earnings for a top-tier Santa Claus, based on Vox reporting.

• Felix’s Number: $100,000 [42:07]

  • The SEC fine DJ Khaled must pay for illegally promoting crypto scams; compared to larger fines for Floyd Mayweather and none for companies like Equifax post-data breach.

• Anna’s Number: 7.83% [43:15]

  • Coupon rate on a bond issued by UniCredit (Italian bank), compared to 1% earlier in the year, illustrating growing financial stress in Italy.

Timestamps for Key Segments

• Introduction & Hosts’ Driving Habits: [00:00 – 01:26]
• GM Plant Closures & Car Buying Trends: [02:36 – 16:58]
• Global Scale and Car Industry Leadership: [11:08 – 16:58]
• Fed, Trump, and Central Bank Independence: [16:58 – 29:24]
• Market Capitalization & Big Tech: [29:57 – 40:37]
• Technology Transitions & Apple’s Risks: [36:06 – 39:54]
• Numbers Round: [40:37 – 44:12]

Memorable Moments & Quotes

• Felix Salmon [05:47]:

  “The way you make money in the auto industry is by running auto plants at 100% full capacity.”

• Emily Peck [07:19]:

  “GM coming out and saying stuff about electricity, electric cars and autonomous vehicles strikes me as just totally disingenuous.”

• Felix Salmon [15:56]:

  “I feel so depressed that the only real visionary in the entire car industry is fucking Elon Musk.”

• Emily Peck [30:46]:

  “Brands are like people to people, and Market Cap is kind of like an easy thing to wrap your head around. It’s like a race or a football score.”

• Discussion on the nature of visionary CEOs and masculinity in auto culture [16:18]:

  "Every car visionary car CEO is basically a boy with toys trying to say what would be cool..." — Felix Salmon

Tone and Style

The conversation is fast-paced, witty, and self-deprecating—particularly about the hosts’ own lack of “car culture” cred. The tone walks the line between irreverent and insightful, with playful jabs at industry figures and one another, but always grounded in well-informed analysis.

Final Thoughts

For listeners, this episode delivers a thorough and entertaining breakdown of seismic shifts in the auto industry, the subtleties of economic policy, and the quirks of financial media obsessions. It’s especially relevant for those interested in how corporate strategy, public policy, and cultural trends intersect in today’s business news.