Trump Taps Warsh For Fed Chair, Furman Reacts to Rate Hold

Summary

Wall Street Week (Bloomberg)

Episode: Trump Taps Warsh For Fed Chair, Furman Reacts to Rate Hold

Date: January 31, 2026
Host: Michael McKee (filling in for David Westin)
Guests & Contributors: Steve Ratner, Christina Raffini, Jason Furman, Barry Ritholtz, Paul Sweeney, Tom Keene, and others

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Overview

In this episode, Wall Street Week tackles an eventful week in American and global capitalism, anchored around President Trump’s nomination of Kevin Warsh as the next Federal Reserve Chair. The episode dives into the mechanics and politics of monetary policy, the implications of direct government intervention in business (“state capitalism”), major changes to the SNAP food assistance program, and the explosion of private investment in youth sports. The hosts and expert guests analyze how these evolving trends tie into broader economic and political narratives, offering insights on market reactions, policy direction, and societal impact.

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1. Trump’s Fed Chair Pick: Kevin Warsh

Segment Start: 00:57

• Context: President Trump announces Kevin Warsh, a former bank executive and Fed governor, as his pick for Fed Chair, replacing Jay Powell in May, pending Senate approval.
• Market Reaction: The appointment signals a continuation—possibly even sharpening—of the “Trump-era” approach to monetary and fiscal policy.
• Stephen Myron (Fed Governor) Comments:
  • Praises Warsh’s “enormous gravitas” and market respect.
  • Addresses public concern about Fed independence under Trump:
    • “The President has never, ever asked me to do anything on monetary policy. He has never asked me to do any specific action on monetary policy.” (01:44)
    • Argues that the Fed’s job is to “take policy actions consistent with the data.”

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2. Fed Rate Hold: Jason Furman Reacts

Segment Start: 03:58

• Fed Leaves Rates Unchanged: The Federal Reserve holds steady, signaling optimism about economic conditions.

• Discussion with Jason Furman (Harvard Economist, former Obama adviser):

  • On Market Sentiment:
    • “Are we there yet?”—The sense is things are close to normalizing, with the Fed sounding "happier" (04:04).
    • Balance of risks: “They’re aware of both the risks, but they both have diminished.” (04:11)
  • On Labor and Inflation:
    • Unemployment has stabilized, inflation softening—though numbers aren’t “much better” (04:21).
    • Causes of Lower-Than-Expected Inflation:
      • Businesses absorbed tariffs, sometimes selling goods at a loss (06:02).
      • Tariffs have been dialed back: “Originally... average tariff rate above 20%. Now... around 11 or 12%.” (06:22)
    • Immigration limits have reduced the need for new jobs to keep unemployment steady (06:53).
  • On the Dollar:
    • Discusses Trump’s “market will decide” view:
      • “First of all, it’s not like up is always good and down is always bad. It depends what you want the dollar to be.” (07:34)
    • Weaker dollar may help exports but risks higher consumer prices and political backlash (08:29).
  • Memorable Quote:
    • “This might be good economically but bad for him politically.” (08:29)

• On Japan’s Bond Market Volatility:

  • Furman: Japan is “finally behaving like a normal economy” after years of exceptions in global macroeconomics (09:27).
  • High debt-to-GDP ratios could limit fiscal flexibility, serve as an example for the US (10:18).

• Trade/Geopolitical Risks:

  • Limited tariff retaliation so far, but risk increases if new tariffs are introduced (11:14).

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3. State Capitalism: Trump Administration Takes Equity in Key Businesses

Segment Start: 14:16

• Overview: The Trump administration is not just bailing out companies but actively taking equity stakes for profit and security—the “referee playing in the game.”
• Recent Government Investments:
  • 10% in Intel, 15% in MP Materials (rare earths), stakes in Lithium Americas, Trilogy Metals, and a “golden share” in Nippon Steel.
  • Not focused on preventing collapse but on profit and “strategic advantage.”
  • Example: MP Materials shares rose 224% last year following government backing.
• Criticisms:
  • This approach may distort markets, reduce competition/innovation, and lead to favoritism and corruption.
  • “State capitalism is a slippery slope away from free markets.” (16:06)

Expert Reactions

Steve Ratner (Willett Advisors; former Obama auto bailout czar)

• On the Ad Hoc Nature:
  • “It feels as much the President is just doing this because he can. He kind of keeps forgetting he’s not in the private sector anymore. And he sees money on the table and he just goes and tries to get it.” (17:20)
  • Contrasts current actions (first resort, targeted at individual companies) to Obama-era auto bailouts (last resort, sector-wide, with deliberative guardrails).

Sarah Bauerle Danzman (Indiana, Atlantic Council)

• On Market Distortion:
  • “We’re a market-based economy and the idea is that we want markets to pick winners, not governments. And what we’re seeing in the current administration is much more willingness to pick particular winners.” (18:16)
• Warns that direct government stakes can pressure businesses to make decisions for political—not commercial—reasons (19:36).

Discussion: Should US Emulate China’s State Capitalism?

• Ratner: Chinese state-owned firms are less efficient, but government direction (e.g., chips) can accelerate progress. US has “low” odds of getting this right and should err on doing less (21:17).
• Bauerle Danzman: The US shouldn’t attempt to “become China” but may need better-coordinated responses to issues like Chinese oversupply (21:59).
• National Security Justification:
  • National security claims make equity stakes more palatable in Congress (23:21).
  • Raises the need for strict, transparent processes to avoid corruption.

Corruption and Economic Risks

• Ratner:
  • Argues current administration has crossed the line into “full-on corruption” with numerous instances (24:29).
• On Market Consequences:
  • The largest concern is not direct economic impact, but political favoritism:
    • “Companies ... are terrified about what they say, what they do, and trying to figure out how to avoid antagonizing a president who has made retribution a fulcrum part of this administration.” (25:31)

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4. SNAP Cuts and Ripple Effects Throughout the Food Economy

Segment Start: 28:28

• SNAP (formerly Food Stamps): Government is set to reduce SNAP spending by $186 billion over the decade (“one big beautiful bill”).

• Interviews:

  • Tammy Wilson (Feeding Westchester):
    • Even “affluent” counties have food insecurity.
    • SNAP only covers the first 2-3 weeks of each month; food banks fill the gap (29:35).
  • Sally Lyons Wyatt (Retail Analyst):
    • SNAP “shoppers are savvy,” make frequent, larger trips to the store (31:00).
    • Significant portion of their spending occurs at discount/value stores.
  • Brian Cavey (CoBank):
    • Multiplier effect: Every $1 of SNAP spending generates $1.50 in economic activity; 24 cents per grocery dollar goes to farmers (32:11).

• Impending Cuts:

  • Food banks are preparing for a surge in demand as SNAP is cut (32:45).
  • “We are at least cusp... going to be at some point over the next few years a 40 to 50 million pound organization, if not more.” —Christina Raffini (33:13)

• Farm Bill Connection:

  • 80% of the Farm Bill is nutrition (mainly SNAP).
  • Matt Perdue (North Dakota Farmers Union): The SNAP-farm support link is politically crucial for passing the Farm Bill and supporting rural economies (34:55).
  • Majority of heavily SNAP-dependent counties are rural, not urban.

• Policy Impacts:

  • During delays, food insecurity and mental stress spike (37:12).
  • Grocers attempt to manage supply to ensure protein affordability as funding changes.
  • The Farm Bill’s future, essential for rural and food security, may be jeopardized by SNAP’s shrinkage.

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5. Youth Sports: Big Business, Big Investment, Big Pressure

Segment Start: 40:20

• Industry Overview: Parents spend ~$40 billion/year on youth sports, outpacing the revenue of the big four professional leagues.

• Changing Nature of Youth Sports:

  • From local, affordable “rec” leagues to costly, travel-intensive club teams (43:18).
  • “It used to be almost like a hobby. Now it’s like a job.” —Brayson's father (41:15)
  • Parents make sacrifices—sell cars, forego cable, buy RVs—to afford participation.

• Access and Inequality:

  • Tom Ferry (Aspen Institute): Travel teams crowd out less affluent and multi-child families; local leagues are pushed aside as early as 3rd or 4th grade (43:28, 44:52).

• Institutional Investment and NIL (Name, Image, Likeness):

  • Big investors/private equity moving into youth sports academies—IMG Sports Academy was acquired for >$1 billion in 2023.
  • Dan Porter (Overtime): New leagues/platforms blend media and competition, offer earning potential for top athletes (47:01).
  • NIL means some high schoolers now profit from their brand.

• Odds and Economic Incentives:

  • Only a minuscule fraction will ever go pro (46:15).
  • Growth in athletic scholarships and NIL opportunities (“north of $4 billion” in NCAA athletic aid, up from $250 million in the 1990s) spurs more family investment and, sometimes, unrealistic expectations (50:35).

• Memorable Family Perspective:

  • “We would just make it work ... we didn't have cable because we put that $100 a month towards ball for him.” —Hoffman family (41:51)
  • Emotional payoff comes with each milestone, even as the odds remain daunting (51:33).

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Notable Quotes and Timestamps

• “The President has never, ever asked me to do anything on monetary policy... He’s never asked me to do anything.” —Stephen Myron, on Fed independence (01:44)
• “It feels as much the President is just doing this because he can. He kind of keeps forgetting he’s not in the private sector anymore.” —Steve Ratner, on Trump’s interventionism (17:20)
• “We’re a market based economy and the idea is that we want markets to pick winners, not governments.” —Sarah Bauerle Danzman (18:16)
• “I think we’re past the point of appearance of corruption. I think we’re fully in corruption.” —Steve Ratner (24:29)
• “Every dollar of SNAP spending generates about $1.50 in economic activity.” —Brian Cavey (32:37)
• “It used to be almost like a hobby. Now it’s like a job.” —Greg (41:15)

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Key Takeaways

• The Warsh Fed nomination renews scrutiny on the independence and political pressures facing the central bank.
• The Trump administration’s forays into “state capitalism” blur the lines between government and business, raising risks for markets and foundational economic principles.
• Deep cuts to SNAP will reverberate through the food economy, with rural America likely hitting the hardest, and potential political consequences for the Farm Bill coalition.
• The youth sports industry epitomizes the financialization of childhood pastimes, with massive private investment transforming access, incentives, and family finances.
• Across all these topics, the underlying themes are rising political intervention, shifts in the balance between state and market, and the far-reaching socioeconomic impacts of policy decisions.

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Transcript

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make us part of your weekend routine on Bloomberg Television Radio and wherever you get your podcasts. This is Wall street week. I'm Michael McKee in for David Westin who's out on assignment this week. The news all of Wall street has been waiting for. President Donald Trump announcing his pick for the next chair of the Federal Reserve. Kevin Warsh, a former bank executive and Fed governor during George W. Bush's presidency, is set to take over from Jay Powell when he leaves the seat in May pending confirmation in the Senate. On the heels of Trump's announcement, I spoke with Fed Governor Stephen Myron who might find a like minded colleague in the new Fed chair. Chairman designate Warsh has a long and illustrious career in history as a very insightful thinker on monetary policy. I think he's a fantastic pick for the from the President. I think he's got enormous credibility. I think he's got enormous gravitas. I think he's got enormous, enormous respect from financial markets, from economists, from everyone. I think he's going to do just a knockout job. I'll talk about your experience. You came to the Fed from the White House and I'm sure, you know, people said he was just put there to do what Donald Trump told him to do. Did Donald Trump tell you to do anything in particular? And do you think he told Kevin Warsh that? And even if he didn't, how do you, how did you, and how would Kevin fight the perception that he's the President's man inside the Fed? Look, the President has never, ever asked me to do anything on monetary policy. He has never asked me to do any specific action on monetary policy. He's told me his views on monetary policy. But he tells the whole world his views on monetary policy. You know them as well as I do, right? That's not a secret. He's never asked me to do anything. And I wasn't in the room with any of, you know, Chairman Designate Warsh's conversations with the President or anybody else involved, involved in this selection process. So I don't know what those conversations were like. But if they were anything like the conversations I had with the President about monetary policy, then he wouldn't have asked him to take any specific actions. Well, how do you, how do you get the public to realize that you do that? By taking policy actions that are consistent with the data. And I think that, you know, I've laid out a case where the inflation measures that are consistent with supply demand imbalances in the economy, the inflation measures that are relevant for monetary policy are indicating that there's no material overheating, that there's no material inflation issues in this country right now. So by taking policy steps that are consistent with the economic data that are justified by the state of the economy, I think you're delivering the right policy. Earlier this week, David Westin spoke with Jason Furman after the Fed's decision to keep rates steady. Furman is a professor of economics at Harvard and served as chair of the Council of Economic Advisers under President Obama.

[Barry Ritholtz]

So, Jason, we heard from the Fed this week and I guess I'd say like the kid in the back of the car. Are we there yet?

[David Gura]

We're looking pretty close and they just sounded happier than they've sounded in a while.

[Barry Ritholtz]

It's interesting, they didn't talk about balance of risk. They said we're aware of both the risks, but they both have diminished. What's happened, it's given them more confidence apparently than before.

[David Gura]

Well, the unemployment rate ticked back down and a lot of people are expecting maybe it'll be stable this year and the couple year rise we've seen will come to an end. On inflation, the numbers haven't gotten much better, but there's a real softness in them. There's a little bit of softness in the labor market. There's some quirks that have been elevating the numbers. And so I think it's reasonable to think inflation's going down, not up as well.

[Barry Ritholtz]

The Fed will remain data dependent. That is to say, things could change and so things could change for the rest of the year. Here. If it changed, for example, on inflation, where do you think it would come from?

[David Gura]

On inflation, it would be, first of all, inflation expectations. And different measures are saying different things. Some of them. For example, the conference board this week had scarily high inflation expectations. I think that was probably, you know, people reflecting the political situation and their general fears about the world, not a specific forecast for inflation. That's one place it could come from. Another place is if we do see a lot more tariff pass through going forward than we've seen to date. I think think we're through most of the worst of it, maybe another quarter or two. But, you know, this is an unprecedented situation in terms of the way we've raised tariffs. So we can't be totally confident about how it plays out. And then the very last thing is there's a lot of tailwinds in the economy right now. There's a fiscal expansion, there's a data center expansion, there's a weak dollar. All of that will put upward pressure on the economy, will show up in real growth. Will it show up in inflation? No one can be totally confident of the answer to that.

[Barry Ritholtz]

Do you have a theory about why we haven't seen more inflation because of tariffs so far? I mean, if we went back a couple of years, a lot of people would have predicted we would see more than we have. Why haven't we?

[David Gura]

Businesses have absorbed a lot more of it than we were expecting. Some of that may be just temporary and eventually they'll pass it through. You look at the auto companies and they're selling cars at a loss. They're not going to sell cars at a loss forever. So if the tariffs stay there, they're going to raise their prices. The tariffs have also just keep getting dialed back. So originally the announcement was for an average tariff rate above 20%. Now we're tracking around 11 or 12%. So it's maybe half as many tariffs as were originally announced.

[Barry Ritholtz]

So unemployment has also stabilized. Actually went down a little bit. What is the cause for that? Because on the one hand, we hear businesses don't have the same certainty. They're a little more reluctant to hire. I think there's a consensus they're not hiring as robustly. At the same time, we don't have more unemployment. How much of that's because we just limited the supply because of immigration?

[David Gura]

Most of it is because we limited the supply because of immigration. We just don't need that many jobs to keep the unemployment rate constant. We haven't been adding that many jobs lately. But in an economy with, you know, an aging workforce with low fertility rates, absent immigrants, you know, we wouldn't necessarily need any jobs to keep the unemployment rate constant.

[Barry Ritholtz]

The Fed decision and this conference was not the only news of interest to Bloomberg viewers. Listeners, watchers, readers this week we also had a lot of talk about the US Dollar. The dollar has weakened rather significantly. And we had President Trump say, yeah, sure, it'll seek its own level, which is not normally what I expect to hear out of the president states, yeah,

[David Gura]

you know, whenever I hear Treasury Secretary say we believe in a strong dollar, there's a part of me that's sort of bothered by that. First of all, it's not like up is always good and down is always bad. It depends what you want the dollar to be. Moreover, it's not clear why markets should care when a Treasury Secretary says that. So in a way, I found it actually quite refreshing that President Trump, first of all is open to a weaker dollar and second of all actually said the correct thing, which is the market's going to decide. It's not going to be words from him, Scott Besant, or anyone else that's going to decide where the dollar goes. So I sort of found that statement slightly charming.

[Barry Ritholtz]

At the same time, the President explained why, in part, he liked that because he said we get to sell more. It really helps our exports, which I think is true. Lower price, essentially the rest of the world. But he didn't capture the other part of it. We could be having higher prices for what we have here. It could, could it not exacerbate inflation?

[David Gura]

Absolutely. And I think it might be the right thing for the US Economically. We have too large a trade deficit. We still do. And a weaker dollar would help redress some of that imbalance in the United States, some of those global imbalances, but it would do it at the expense of American consumers. Higher prices would drive consumption down. Historically, it's actually quite unpopular to have weaker currencies. In fact, in countries around the world, you've seen governments toppled when the currencies weaken precipitously. I don't think it's going to be as dramatic in the United States because we don't trade as much as many other countries do. But on balance, my guess is this might be good economically but bad for him politically.

[Barry Ritholtz]

We also this week had a fair amount of turmoil, volatility, I guess we'll say, in the Japanese government bond market. What is going on there is that simply an adjustment of the economy coming off of a zero inflation based, zero rate base or might there be something more profound?

[David Gura]

Look, for a long time there were the laws of macroeconomics that applied to every country on earth except Japan. And then there were a separate set of rules for Japan. And this week looked to me like the normal rules of macroeconomics applying in Japan too. So the only thing that was unusual about it was that it was normal. And we've gotten just so used to Japan being anything but normal.

[Barry Ritholtz]

At the same time, Japan has a fairly high ratio of borrowing to its GDP, certainly I think the highest in the G10. They don't have as much fiscal headroom to deal with things. In part, I think of what happened with the JGPs was when Prime Minister takes, he said, you know, we're going to suspend some of these taxes and explain how she's going to pay for it. How much flexibility do they have? Could it be an early example of sort of the pressures on governments, including United States government, of having such high debt to GDP ratios?

[David Gura]

Yeah. I mean, you think about when Liz Truss made her announcement and the huge blowback against the pound. This was a bit smaller than that, which makes sense. Japan is a bigger economy and has a larger base of domestic saving relative to the uk but it's not quite at US level of exorbitant privilege. And even if it were, it's way above US levels of debt and way above US levels of borrowing. Now that you also have inflation there for the time. First, first time in a while, there's, I think, good reason for investors to want to be compensated more for lending to Japan than historically they had demanded.

[Barry Ritholtz]

You, of course, are an economist, but geopolitics can hit economics. At the same time. We are seeing a back and forth, the United States and its traditional allies about exactly who's on whose side and are we together or not? What effect could that have? As apparently some, maybe some boundaries start getting built.

[David Gura]

Yeah. So so far, you know, one of the surprises to me last year was that most countries in the world did not retaliate to U.S. tariffs. Canada did, China did. Most everyone else prepared plans, put them on the shelf, and they're still sitting there on the shelf. The question is, what happens this year with Greenland, it seemed like there was a more credible threat of retaliation. And that was part of why the President may have backed down on that. Are you going to see more of that? And I think to some degree it'll depend on the direction of travel for our tariffs. If we start peeling them back, making exceptions and reducing them, then maybe other countries will stay quiet. But we try to do another round on top of what we've already done and I think we'd see a lot of retaliation. But then again, I thought we'd see retaliation last year and I was wrong

[Tom Keene]

that Coming up, David Westin brings us the stories of Trump style state capitalism, how changes to the food stamp program work through the US Supply chain and the US Sports business that's even bigger than the NFL. All that's still ahead. This is Tom Keene inviting you to join us for the Bloomberg Surveillance Podcast. It's about making you smarter every business day.

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[Barry Ritholtz]

This is a story about what happens when the referee decides to play in the game. The Trump administration has not been shy about taking ownership interests and otherwise participating directly in businesses that we otherwise thought were in the private sector. Our colleague Michael McKee brings us up to speed on what's been done so far.

[Greg]

My administration will offer GM and Chrysler

[Tom Keene]

a limited additional period of time. It isn't a new practice. The government took stakes in auto and insurance companies during the Great financial crisis, but it is a shift. At that time the idea was to provide funding backstop to keep the companies alive. Both General Motors and Chrysler were effectively insolvent. Facing collapsing sales, frozen credit markets and imminent bankruptcy. The US ended up owning about 61% of GM and 10% of Chrysler. When they returned to health, the government sold its shares in both cases at a loss. Today, the Trump administration is taking significant equity stakes in a number of American companies. 10% in chipmaker Intel, a 15% stake in rare earths firm MP Materials that came with a government guarantee on product prices and sales shares in companies such as Lithium Americas and Trilogy Metals. A so called golden share in Nippon Steel. This time the goal isn't to prevent bankruptcies, but to make a profit and theoretically strengthen supply chains for American manufacturers. Administration officials insist national security is at stake. China, Russia and other malevolent competitors cannot be allowed to get a strategic advantage in energy defense production and AI. The government backing can certainly help. MP Materials shares rose 224% last year. Critics say the government should not be picking winners and losers or influencing outcomes in the private sector. The government's goals may not align with the company's and lead to misallocation of capital. Ownership may reduce competition and innovation. State capitalism is a slippery slope away from free markets.

[Host/Interviewer]

It's not as if the US government has never taken ownership in interest in private companies before. But this time is different.

[Steve Ratner]

I think a number of things are different. First of all is simply the number of situations he's done. Everything from a golden share in US Steel to stock in intel to what you might call an export tax on chips to China. It's just all over the place. There doesn't seem to be any particular rhyme or reason to it.

[Host/Interviewer]

Steve Ratner is chairman and CEO of Willett Advisors, which invests the personal and philanthropic assets of Bloomberg founder and majority shareholder Michael Bloomberg. Ratner served as the point person for President Obama for restructuring the US auto industry. During the great financial crisis.

[Steve Ratner]

When I was in the government and we thought about taking stock in Chrysler and General Motors, we went through a whole process of what we called the USGS shareholder. The US Government a shareholder. And how would this work? And what would we do? And. And what were the guardrails? And a lot of thought went into it. This just seems to be the opposite. And so it's a hodgepodge of things. And it feels as much the President is just doing this because he can. He kind of keeps forgetting he's not in the private sector anymore. And he sees money on the table and he just goes and tries to get it. We took the interest in the auto companies not because we wanted to, but because we had to. I'll never forget when we went to the White House and basically said the only way we can save General Motors is to in effect nationalize. It takes 60% of the equity. There was a lot of pushback, as you would imagine, and eventually everyone realized it was the only choice. So it was a last resort, not a first resort.

[Host/Interviewer]

Adding to the ad hoc nature of the administration's intervention is it's targeting individual companies rather than entire sectors. Sarah Bowerly Dansman is Associate professor of International Studies at Indiana and a Senior Fellow at the Atlantic Council's Geoeconomics Center.

[Christina Raffini]

We're a market based economy and the idea is that we want markets to pick winners, not governments. And what we're seeing in the current administration is much more willingness to pick particular winners.

[Host/Interviewer]

And the Trump administration has used the device of taking interest in order to overcome political resistance to deals that it believes will be good for the economy overall. Like when it took a so called golden share in U.S. steel.

[Steve Ratner]

I do think the case of U.S. steel is a little bit different. It was a very controversial merger. I personally thought it was perfectly fine. Steel is not a national security commodity these days. You can buy steel anywhere in the world. People would love to sell it to you. But it was politically a very tough one. And that one, I would actually give the, the White House some credit that it was a clever way to get past the political opposition. It does not involve any ownership. I doubt they will ever exercise it. So, yeah, I put that in a different bucket than saying that Nvidia has to pay, in effect a tax on sending chips to China.

[Host/Interviewer]

Whatever the justification, when the government becomes an owner, even a partial owner in private business, it necessarily changes market dynamics, injecting factors beyond simply supply and demand and economic performance.

[Christina Raffini]

The concern is that the more that the US kind of pushes in this direction of picking specific winners and therefore losers in industries is that it distorts markets. Right? We, as a market based economy, we have a long track record of seeing that when market actors are the ones that are generating and evaluating information and then making capital allocation decisions on the basis of commercial preferences and commercial interests, that we tend to see over the long run that that leads to more innovation, more wealth, more economic development as a whole. And the concern is that the more that the government gets involved in individual business decisions, the more we are kind of breaking that kind of market based understanding of how information is generated in economy and how companies and how investors make decisions. And that is an important distinction because when the government is taking direct stakes in companies, the concern is that now that company is going to be pressured to not always make the best business decisions on the basis of kind of commercial concerns, but now also political concerns.

[Host/Interviewer]

The free market purist would say that the government should never get involved as an owner in American business. But does the performance of China in advancing rapidly in important sectors argue for some, move away from purely private ownership?

[Steve Ratner]

If you talk to anybody in China, they would tell you that the state owned enterprises are almost universally less well run than the purely private companies. On the other hand, when Xi Jinping says our strategic priority is to develop a chips business, everybody marches toward developing a chips business. And lo and behold, they make enormous progress. And so it's a very tough balancing act. I think, on balance, my view would be better to do less than more or none rather than some, because I think the chances of getting it right for a government are relatively low.

[Barry Ritholtz]

Does the experience with China so far actually almost require the United States to revisit the balance between the government and the private sector?

[Christina Raffini]

I think that China is a very different country with a different political culture. It's organized in different ways. When you have so many workers who are integrating into a formal economy and through formal work and factory work with very long hours, it's very hard to see how that translates into the type of economy that would work in the US and that citizens in the US Would actually feel good about. So I think that we want to be careful to not become China in our kind of quest to ensure that we're able to compete in the global economy in which China is doing very well right now. That said, there are specific areas of the economy that the Chinese model, and in particular concerns over Chinese oversupply, need more than just an uncoordinated market response to that.

[Host/Interviewer]

Whether it's semiconductors or steel or rare earth minerals, the Trump administration has justified its actions most often on the ground of national security needs.

[Barry Ritholtz]

What role, if any, does national security play in this? Does that make it a more persuasive, if not compelling case for a government to have an ownership interest?

[Christina Raffini]

Well, of course, it first of all makes the politics of taking stakes like this more tenable because national security concerns have bipartisan support. Congress should be part of the discussion around, you know, how much are we going to allocate in terms of funding to support these kinds of interventions into specific companies? How are we going to decide what are the strategic priorities? How are we going to ensure that the process through which companies are determined to be eligible for these kinds of programs is done in a way that is not about corruption and graft?

[Barry Ritholtz]

We've looked around the world over the years and said a lot of countries are corrupt because of what the relationships are between private interests and government interests in various industries. What are the risks here, even of the appearance of corruption, as these investments are made in companies that often have some connection to the Trump family?

[Steve Ratner]

I think we're past the point of appearance of corruption. I think we're fully in corruption. I think this administration, and I don't mean to sound like a partisan, but I've never seen anything like it in my entire life. People have said, for example, that Lyndon Johnson sort of tilted the board in favor of getting a bunch of television licenses in Texas that made him wealthy. Okay, maybe he did, maybe he didn't. But that was then, this is now. That was one thing. This is like everything. Whether you want to talk about meme coins, whether you want to talk about rare earth minerals, whether you want to talk about real estate developments in the Middle east, whether you want to talk about Jared Kushner raising $5 billion, of which virtually all of it, 99% of it, came from the Middle east, this administration knows no bounds.

[Barry Ritholtz]

Setting aside the potential morality of it, what does it do to the economy? I mean, we have thought for a long time that actually a free market economy served us well in terms of growth, in terms of jobs, in terms of standards of living. What are the threats potentially to the very foundations of our economy?

[Steve Ratner]

Well, let's put it in a few different buckets. First of all, I think the corruption that we just talked about, as distasteful as it is, and I find it reprehensible, it's small potatoes in the great scheme of an economy that's 20 plus trillion dollars. I mean, right? Let's be serious. I think the government taking some of these equity interests are putting these, like, taxes, if you want to call them that, on things. Also relatively small potatoes in the great scheme of things. I think the most worrisome thing, which may not fall exactly into the corruption bucket, is the fact that companies feel like this is an administration that will reward its friends and punish its enemies. The CEO of Exxon said the other day, for example, that Venezuela was uninvestable. Seems like an obvious statement to me. The president immediately said, well, I'm not going to pick Exxon to be my partner of choice. In Venezuela if we actually get hold of any of this oil. And so companies, and I Hear this from CEOs all the time, are terrified about what they say, what they do, and trying to find figure out how to avoid antagonizing a president who has made retribution a fulcrum part of this administration. So I think that's the real danger here.

[Barry Ritholtz]

Up next, the government is tightening up the rules on food stamps to save money and avoid fraud. But the effects may ripple well past SNAP recipients in a food supply chain dependent on that government support.

[Tom Keene]

I'm Barry Ritholtz inviting you to join me for the Masters in Business podcast. Every week we bring you fascinating conversations with the people who shape markets, investing and business. CEOs, fund managers, billionaires, Nobel laureates, traders, analysts, economists, everybody that affects what's going on in the market. Whether you own stocks, bonds, real estate, commodities, crypto. You really need to hear these conversations. Sometimes it's behaviorists like Dick Thaler or Bob Shiller. Sometimes it's fund managers like Peter Lynch, Bill Miller, Ray Dalio. Sometimes it's authors. Michael Lewis, author of the Big Short and Moneyball.

[Paul Sweeney]

Regardless of the conversation, these are the

[Tom Keene]

folks that most markets each week. That's the Masters in Business podcast with me, Barry Ritholtz. Listen on Apple, Spotify or wherever you get your podcasts.

[Christina Raffini]

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[Tom Keene]

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[Christina Raffini]

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[Tom Keene]

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[Christina Raffini]

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[Barry Ritholtz]

This is a story about doing well by doing good. The Supplemental Nutrition Assistance Program formerly known as food stamps was created to help those who could not afford to feed their families. But over time, it's become harder to do that good, even as it's turned into an important part of the larger industry that provides food to Americans of all income levels.

[Christina Raffini]

You need help and we're going to help you. We don't ask for specific details. If you show a need, we're going to be there.

[Host/Interviewer]

This may look like a lot of moving parts.

[Christina Raffini]

Watch your backs everybody, please.

[Host/Interviewer]

It's actually a well oiled operation of volunteers at Feeding Westchester, sorting and packing food for their hungry neighbors.

[Christina Raffini]

In this space we have a variety of things.

[Host/Interviewer]

Tammy Wilson is at the helm.

[Barry Ritholtz]

You are feeding Westchester.

[David Gura]

Correct.

[Barry Ritholtz]

And most of Us, I think think of Westchester county as being relatively affluent.

[Christina Raffini]

Absolutely. So Westchester having need was a shocker to to me, even affluent counties have food insecurity and food insecurity can look like anyone.

[Host/Interviewer]

Wilson says SNAP can only get you so far. For most families, the program provides only enough food for the first two or three weeks in the month after that they turn to food banks for help. But people may be getting even less of the food they need. With revisions to SNAP hotly debated in the the so called one big beautiful bill about to come into effect cuts

[David Gura]

waste, fraud and abuse in government programs like SNAP and Medicaid.

[Host/Interviewer]

Although the target of the program has always been helping Americans who can't afford food, the tens of billions of dollars it injects into the economy each year have wide ranging impacts spreading all the way from grocers.

[Barry Ritholtz]

It's our job to make sure that regardless of that person's budget, they can still get healthy, nutritious food to farmers.

[Tom Keene]

If people eat food, that benefits us, that grow food, just being a farmer, being someone who grows food, I want to see everyone eat.

[Host/Interviewer]

The journey of a SNAP dollar starts with families who use it to buy food from grocery stores from the grocer. It's passed to suppliers and farmers and to their employees, all of whom can then spend the money on all the things they need. All of this results in a multiplier effect. It's estimated that every dollar of SNAP spending generates about $1.50 in economic activity. Sally Lyons Wyatt has been tracking SNAP spending for over a decade.

[Christina Raffini]

The SNAP shopper is pretty savvy so they actually navigate to fit their needs. Food retailers so grocery stores are the largest share but I will tell you you can flip that and look at it differently and it's which retailers depend on SNAP more than others and it is dollar and then some of the value channels and convenience that depend on snap.

[Barry Ritholtz]

What do we know about how the consumers use their SNAP dollars?

[Christina Raffini]

SNAP consumers have their own money because they have to be working. So they use this to supplement their own income to just try and get meals on the table or into the lunch bags or dinner served. SNAP consumers do make more trips to the stores than non snap and they also spend a bit more when they're on those trips. They're also more dependent on retail because it is more expensive to eat out these days. In fact it costs 4.3 times more to eat out than it does to eat at home.

[Host/Interviewer]

For every dollar spent at the grocery store, about 24 cents gets passed down to the farmers Brian Cavey is the senior vice president of government affairs at CoBank, a lender to rural America, an

[Greg]

area that I think not a lot of people are familiar with. And that is that food benefit ultimately is buying food in the grocery store. But I think that impact, that funding making its way back to the producer may not be on the minds of people when they look at the spending that goes into the nutrition programs. And those dollars have a rollover impact in the rural community.

[Host/Interviewer]

But all of this is about to change. Grocery stores, farmers and families are now bracing for the largest reductions in the SNAP program's history.

[Christina Raffini]

Welcome to where the magic happens. So before the pandemic, we were about 25,000 square feet. Now we're at a whopping 62,000 square feet. As you can see, we are prepared for what is coming. We're ready for space and people.

[Host/Interviewer]

The one big beautiful bill includes plans to shrink SNAP spending by more than $186 billion over the next decade. So now food banks like Feeding Westchester are preparing for the fallout.

[Barry Ritholtz]

How big is your operation?

[Christina Raffini]

So food banking is about a pounds game. So we often will talk in pounds. We are a 21 million pound organization. Given everything that has changed, we are at least cusp. We believe that we're going to be at some point over the next few years a 40 to 50 million pound, if not more.

[Host/Interviewer]

The effects of these reductions will ripple through the food ecosystem all the way to the plains of North Dakota, where farmers make up one of the highest proportions of the workforce of any US State.

[Tom Keene]

I take some to market in town directly during harvest and some get stored out here, hoping for better market conditions. And then during the winter months, I haul my commodities to town. This family here was my father's and then I do farm about 600 acres. That's on my mother's side.

[Host/Interviewer]

Family farmers like Tyler Staflin and Matt Perdue have for generations made a living growing and selling commodities at the mercy of the market. Whether it's frigid winters or turbulent trade dynamics, they need help from programs in the US Farm Bill, a wide ranging package of legislation that gets rewritten by Congress about every five years.

[Tom Keene]

The Farm Bill offers a safety net essentially for farmers. So when you have downturns like we are experiencing today, you can kind of count on that farm bill to keep you in operation. And hopefully I can pass my farm on to the next generation. A farm bill is a huge, crucial piece of that.

[Host/Interviewer]

Roughly 80% of the farm bill is nutrition programs, mainly SNAP. Purdue is the president of the North Dakota Farmers Union. While farmers may not see SNAP cuts show up directly in their pocketbooks, Purdue says the indirect impact spells trouble.

[Greg]

60 years now, the Farm Bill has been a bill that supports the entire food system, and so that includes programs to support family farmers and ranchers and programs to support consumers. No more than 20% of the US House of Representatives represents primarily rural districts. And so from a political pragmatism standpoint, it's really important that we have support from legislators who primarily represent urban interests. Right. And their primary interest in the Farm Bill are the nutrition programs.

[Tom Keene]

It's usually a broad group of folks

[Greg]

that ranges from the general farm organizations to the commodity organizations to the conservation organization organizations, and then the nutrition and anti poverty advocates. And those folks come together, and the result of that can be a bill that passes with wide bipartisan support and a very large margin.

[Tom Keene]

There have been efforts to try to

[Greg]

divorce the food programs from the farm programs and push them independently. And that, candidly, is a recipe for both to fail. And we have food insecurity and poverty kind of spread out across the country.

[Tom Keene]

And it's actually a slightly higher percentage

[Greg]

of folks that are both impoverished and food insecure in our rural areas than in our urban areas. And that's an important thing to consider, is that economic impact for those rural communities. And we have a lot of counties that are heavily dependent on this program. If you look at the top hundred

[Tom Keene]

or so counties across the country that

[Greg]

are most heavily dependent on snap, the majority of those are not metro communities, but rather counties that are more rural.

[Tom Keene]

People in general are probably too proud to say that they have to look for assistance in any way, shape or form. So the closest grocery store to where we are today is about 30 miles away. So I'd say that that's a concern in rural America, especially rural North Dakota,

[Host/Interviewer]

is access to groceries for grocers and hungry families. The impact of SNAP cuts is not hard to imagine. They felt its effects during last November's government shutdown when the program's benefits got delayed.

[Barry Ritholtz]

You had a particular vantage point on what that stress on SNAP meant for food insecurity and for the people you supply. What did you find?

[Christina Raffini]

We found that the first thing is that people were mentally stressed, concerned. Some days they were really, really heavy. They were fearful, confused, some very angry, and just didn't know what was going to happen next. So a lot of our food pantries, our schools, we saw a huge increase in November and it was leading into the holidays.

[Barry Ritholtz]

When there's a change, it's not just a Policy change. It's about food security.

[Steve Ratner]

As I say, it's about people putting

[Barry Ritholtz]

food on the table that night. The education piece is really important.

[Host/Interviewer]

Adam Kirk is the chief store operator of, of the Winn Dixie Company, a regional supermarket chain in the South. When it comes to making choices for

[Barry Ritholtz]

that evening meal, it always starts with protein. And when we see funding suppression or

[Tom Keene]

we see price increases or cost increases

[Barry Ritholtz]

in that area, that's where you notice

[Host/Interviewer]

it most in first.

[Tom Keene]

So that's where we react quickly to

[Barry Ritholtz]

make sure that we are providing the

[Tom Keene]

very best value for our customers.

[Barry Ritholtz]

We don't have control of policy change.

[Greg]

We do have control over our purpose,

[Barry Ritholtz]

and our purpose remains the same regardless of the policy. And that is to feed and enrich the communities that we serve. So we really work with local communities and local nonprofits to make sure that we've got partnerships that exist for exactly these moments. So they're not on off programs. We have always on programs.

[Host/Interviewer]

Perhaps there is one silver lining for us food producers. Last year's budget legislation did increase funding for farmers, but it creates a potentially contentious backdrop as Congress negotiates a new farm bill this year.

[Greg]

The farm economy is in really tough shape. Most farmers are losing money, every acre of crop that they plant and harvest. And so when we face some of the financial challenges we're facing right now, we're always going to advocate for, for improvements to the farm safety net, improvements to crop insurance. You know, I'm concerned that the perception of some folks who live in urban communities is that, you know, farmers and ranchers and folks out in rural America don't really care about, you know, our hungry neighbors. And that couldn't be farther from the truth. We need to get the farm bill done. And I think that requires us to bring the Farm Bill Coalition together. If we don't get that farm bill done, we, we won't have updates to farm loan programs At a time when farmers and ranchers are dealing with record debt loads. If we don't get that farm bill done, we're looking at not having the opportunity to improve rural development programs, programs that support small communities to improve conservation programs where there's always opportunities to make those programs better. And so there is a lot at stake here.

[Barry Ritholtz]

So are we going to do some sorting here?

[Tom Keene]

Is that doing let's do it.

[Christina Raffini]

Let's do it.

[David Gura]

I'm excited.

[Host/Interviewer]

We may not know what's ahead, but one thing is certain. If we all do a little more good, it goes a long way for our communities to be well.

[Barry Ritholtz]

Coming next, if you Think you're the only parent spending a small fortune to support your young athlete in travel leagues and clinics? Think again.

[Greg]

It used to be almost like a hobby. Now it's like it's like a job.

[Barry Ritholtz]

We look at the huge and growing business of youth sports, rivaling even the largest pro leagues. This is a story about big money and big sports. They've gone together for years, but recently there's been an explosion. Whether it's pro teams selling for astronomical prices or college players receiving seven figures for their name, image and likeness. Now big money is reaching down into high school and beyond as parents invest in the dreams of their kids.

[Greg]

The goal is to play major league baseball.

[Host/Interviewer]

Brason Hoffman is like many young kids in America, chasing big dreams and facing long.

[Greg]

It's weird because it's kind of starting to change. It used to be almost like a hobby. Now it's like it's like a job almost.

[Tom Keene]

But it's like, if I could have

[Greg]

any job in the world, that's what it would be.

[Host/Interviewer]

And for families like the Hoffmans, supporting that job requires a full time commitment of their own.

[Christina Raffini]

We literally drive three and a half hours for him to play with this organization. Because of their level of development and the coaches they have.

[Host/Interviewer]

Between club fees, private lessons, nutrition, coaching and equipment, the Hoffman family spends more than $16,000 a year on their son Brayson's baseball.

[Christina Raffini]

We would just make it work. I mean, sometimes there was points where when he was younger and first starting before I got the job I have now, and we were traveling a little more than we traveled now, we didn't have cable because we put, you know, that $100 a month towards ball for him.

[Host/Interviewer]

The costs got so high, the family invested in this RV to travel to Brayson's summer tournaments to avoid spending on hotels.

[Tom Keene]

Last night I was hungry.

[Host/Interviewer]

And the Hoffmans are not alone. Across America, parents are estimated to spend $40 billion a year on their children's sporting dreams, dwarfing the annual revenue of America's big four sports leagues.

[Tom Keene]

I have so many of my friends,

[Greg]

Greg, today that say, Alex, if you were a kid today, if you were 10 years old, Alex Rodriguez would never make it to the big leagues. And I would say, why?

[Tom Keene]

Well, because you and your mother couldn't afford it.

[Greg]

And the same parents are selling their cars, they're having a double mortgage in their homes to be traveling around this perfect game stuff and all this nonsense, you have to make sports more affordable.

[Paul Sweeney]

When I was a kid, I played youth sports. I didn't start any form of Travel sports until maybe 8th grade and it was barely travel. It was travel around the county

[Greg]

and

[Paul Sweeney]

sport was accessible, it was affordable. That experience has been transformed over the past 20, 25 years.

[Host/Interviewer]

Tom Ferry is the founder and executive director of the Aspen Institute's Sports and Society program. He has studied the growing industry for decades.

[Paul Sweeney]

The growth really started with the travel team industry. So in the 1970s and for most of the 1980s, youth sports were dominated by local low cost in town recreation leagues and then hockey and then basketball and baseball and soccer and other sports really in the 1990s and the early aughts really discovered the idea of youth sports tourism. Building these large what we call megacilities in places like, you know, central Florida or Indiana or Arizona, with many fields or gyms where you could attract teams and host these large tournaments and make a lot of money from parents who are paying for fees or watching their kids play, or local hotel rooms which the tournament organizers get a cut of. So once the US sport tourism thing was put in place, then we saw the explosive growth of the travel team industry and ultimately the pushing aside of these local low cost recreation leagues that once existed really up through eighth grade and now often disappear around third or fourth grade for most kids.

[Barry Ritholtz]

Who's paying that money? I mean, if it's the parents, I mean, not all parents can afford, afford that kind of expense.

[Paul Sweeney]

Right. So that's part of the challenge is once you introduce these travel teams at ever earlier ages, you structurally begin to push aside the kids from the lower income home, Sometimes a kid from the middle income home, whose family can't afford that, especially if they have two, three, four, five kids, you can't do this for every kid and you also don't have the time for it yet for

[Host/Interviewer]

the most part, as costs rise, parents have continued to show a willingness to pay and big business is taking notice. IMG Sports Academy was acquired for more than $1 billion in 2023. And other high profile investors are looking to get a slice of the youth sports pie.

[Paul Sweeney]

It's a great environment for private equity to get into. You know, look at this messy space. You begin to buy companies, you roll them up, you consolidate, you move to as best as possible, sort of a vertical integration. There are no rules around what private equity can or cannot do in this space as there are at the professional level. It's a big messy environment and an exciting environment for private equity. Not all of them are doing the same thing. Some of them are really super focused on the elite environment, wringing more and more Money out of families under the idea that your kid might be elite.

[Host/Interviewer]

And the word might is doing the heavy lifting. A recent study found 11% of parents believe their child could go pro. But the actual chances are tiny. Out of 10,000 high school players, fewer than 16 will be drafted by a major league baseball team. And the odds are even longer for the NBA and NFL. But even if a young athlete may not make it to the big leagues, there are a growing number of avenues to see a return on investment. Name, image and likeness deals offer college athletes and those even younger the chance to make real money that goes far beyond the traditional athletic scholarship. That's part of what drives new businesses like Overtime, founded and led by Dan Porter.

[Greg]

We kind of started when we realized that this whole generation, Gen Z, Gen Alpha now, just wasn't watching television and they weren't watching live sports on television, but they were watching all their favorite YouTubers and now their favorite tiktokers. So in between that space of traditional sports media and digital, we created a new sports entity. And after five years of doing that and growing it really big, we thought, okay, now we're this really big sports media company for young people. But we don't actually own anything. And we saw a bunch of opportunities and we launched Overtime Elite, which is a basketball league, Overtime select, which is a women's basketball league, and OT7, which is a football league. Heads up.

[David Gura]

Touchdown.

[Greg]

So now we're, I guess in business school they would say vertically integrated in that we both own the IP and we also distribute.

[Host/Interviewer]

Made up of some of the best 16 to 20 year olds in their sports. It's elite competition paired with a platform that lets athletes build their brand and their earning power along the way.

[Barry Ritholtz]

How does the overtime path compare with what we think of as a traditional one? You go to high school and you go play college ball, maybe you end up in pros. How does it compare? How does it fit up?

[Greg]

Yeah, I would say in general, you know, if you look at basketball or football, there's maybe 25 or 35 kind of schools or platforms like us that play a national program. I always say there's, I don't know, 32,000 high schools in America and 31,950 of them will keep doing the same thing that they've always done. They'll play their local school, they'll do other stuff. But there are these national programs that play and that invest a lot of money in where all the best players gravitate. And so it is kind of a little bit of tiered system. For those people who say, oh, I remember when I was in high school, we just did. A lot of that still exists. It's just that both the demand from the audience as well as from the best possible players playing in high school, if you're really good and scoring 100 points points on somebody who's going to be your local dentist or real estate agent, isn't as desired as it once was.

[Barry Ritholtz]

Do the parents pay you? Do you pay the parents? How does the money flow?

[Greg]

The parents don't pay us. There are, of course, academies across the country where parents do pay for us. We're a media product. So the economics go through sponsorship and media, and then nil exists at the high school level as well as the college college level. So there's always going to be a small number of players who get paid.

[Host/Interviewer]

As earning potential for athletes expands, so do the business opportunities around them, changing the economics of the system.

[Greg]

Until five, six, seven years ago, all sports teams were owned by families, mostly or occasionally companies. There was no private equity in sports. There weren't a lot of investment opportunities. That's clearly changed. So what happens when that starts to get saturated at the pro level? It moves to the college level. And nil and conference readjustment and television rights now see a lot of money pouring into the college level. Well, now that you know that picture is overflowing and going to the high

[Host/Interviewer]

school level, be it nil, college scholarship leagues like overtime or playing for the Yankees, there are more pathways for kids to see a return on investment. But Tom Ferry says that just encourages parents to spend even more money.

[Paul Sweeney]

This whole industry is built on incentives, and those incentives have changed dramatically over the past 30 or so years. So in the early 1990s, there was about $250 million a year in athletic aid that was handed out by division one and division two, two universities in the NCAA. Okay, quarter million dollars today, that's north of $4 billion. So that's a lot of chum that has been thrown in the water of youth sports. And it's making the fish, the parents, a little bit crazy. They want some. They think this is an actual meal. What they don't realize is it's really still hard to get your kid a college scholarship.

[Host/Interviewer]

For families like the Hoffmans, they know it's a long and expensive road to see their son Brayson chase his dream, but it's one they're willing to take

[Christina Raffini]

every single time Brayson, like, kind of reaches the next level. I have, like, a moment as well. What I usually call it. Like, I'll have a moment. I'll get emotional. Like, the first time, you know, he goes on to, like, he went on to a high school baseball field. I was like, wow. I was like, okay, we're making progress. We're moving. I don't doubt he will make it because he's focused and driven, and it's what he wants, and we'll see him there one day.

[Barry Ritholtz]

That does it for us here at Wall Street Week. I'm David Westin. See you next week for more stories of capitalism.