War sends cargo to the skies

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I'm just going to go ahead and say that risk is still macroeconomic worry number one.

From American Public Media, this is Marketplace.

In Los Angeles, I'm Kyle Ritz.

It's Tuesday.

Today, this one is the third of March.

It has always to have you along.

Everybody, we are four days into things in the Middle East.

And the only thing that is clear is that there are a whole lot of things that aren't clear.

So we're going to talk about that and what that means.

Economy-wise, Greg Ip is at the Wall Street Journal.

He also joins us on the occasional Friday.

Hey, Greg.

Hey, Guy, how are you?

I'm all right.

Thanks. Test my premise, risk.

What is your assessment of the risk tolerance, the risk atmosphere out there?

Well, you wake up to a new war in the Middle East and obviously people are worried.

And that adds to the risk and the whole geopolitical economic situation.

And this comes at a time when people are already kind of on edge about like the AI bubble

bursting or maybe everybody losing their jobs to AI, still some inflation pressure out there.

So it kind of adds to an overall mix of anxiety out there.

Now, all that said, I would say that the reaction in the two days of trading we've had since

the war began has been muted.

On Monday, oil rose, but it didn't rise as much as a lot of analysts had expected.

Stocks fell off, sold off, but the end of the day mostly unchanged.

Tuesday, we wake up and it's almost like a delayed reaction.

Oh, wait a minute. There's a war going on.

Oil goes up some more and stocks fell.

But even so, I've been through a lot of these things over the years.

Right now, it still feels like a muted reaction by the markets to what's going on in Iran.

Talk to me about the dollar and bonds, would you?

Because the dollar's been rallying.

Bond yields are going up, which means people are selling bonds, explain all that.

Sure thing. So let's talk about the bonds part.

That's a little bit easier to explain.

So when people worry about inflation, for example, because oil prices are going up,

they worry that the federal reserve will not be able to lower interest rates as much.

If interest rates aren't going to go down, that means bond yields are probably supposed to be

higher than they already are when bond yields go up, prices go down.

And that is exactly what we've seen happen in the last couple days.

A small decline in bond prices, a small increase in bond yields.

So if you are hoping for some relief last week,

mortgage rates drop below 6%, don't expect them to go much lower.

Maybe they go a little bit higher next year or two.

The issue with the dollar is an interesting one, Kai.

Because the dollar did go up, which is sort of what is supposed to happen when there's a war

because the dollar is a safe haven, but it's been a break from the prior year

when you had all this geopolitical conflict and the dollar was going down.

And what that, I think, told us, was that the US, at least for most of the past year,

was now being seen as a source of instability because of trade wars and stuff like that.

Not the place you go to escape instability.

The last two days are a little bit of a break from that.

The caveats of this next question, of course, is that you're a business economics guy

and not a geopolitics guy.

But what do you imagine the market, how to phrase this?

What do you imagine the president's pain point to be vis-à-vis the markets?

Is he looking at stocks, is he looking at bond yields?

Do you think there's a thing that's going to make him go, you know what?

Let's get out of this in a hurry.

You know, I think all those things are going to like bear on that Kai.

I think the president goes into this war on the premise that within four to six weeks,

he can achieve most of his aims, which is really basically the capitulation of the regime in Iran

to his key demands, stopping nuclear enrichment, stopping ballistic missile development,

stopping support for proxies.

And so I suppose I would assume that he's stilled himself for some pain over that four to five

weeks.

I think the thing is, if the four or five weeks elapsed and he's not getting closer to his goals,

and the pain continues to build, that presents him with some really tough choices.

Because this is, as you say, a president that cares a lot about the stock market,

he's been urging the federal reserve to cut interest rates, claiming inflation is not a problem.

So if the war does not quickly start delivering the goals that he has set out for himself in the

next few weeks, it does start to really elevate his pain points.

Thirty seconds on this next answer, Greg, and then we've got to go.

Four to six weeks sounds like a very long time as we sit here on day four.

It really does, and a lot can happen.

Now, on the one hand, you might say, well, the Iranians, they have a lot of missiles,

they have a lot of drones.

They can hold out for a long time.

This, you know, conflict has been going on at one level or another for 50 years.

They can certainly hold out a little bit longer.

On the other hand, a lot of things are going against them.

Their civil, their population is angry at them.

Their defenses have been shown to be very weak and so forth.

I think the president is hoping that he maybe ends up in a Venezuela like situation,

where the regime stays in place, but basically agrees to start behaving in a less

confrontational way.

Will that happen?

I don't know, as you said.

These are geopolitics.

Nobody should be too confident.

Absolutely not.

Greg, with the Wall Street Journal,

occasionally with us on a Friday, thanks, Greg.

Thanks for having me.

Wall Street today, not as bad as it could have been, as Greg was alluding to,

has bought all the needs to be said.

We'll have the details when we do the numbers.

The commercial aviation is in the news today in part because that's really the only

way for people who want to get out of the Middle East to get out also though,

because the airspace in that region is obviously perilous,

which is hampering air cargo.

Yes, most of what moves around the world does travel by ocean freight,

but air cargo demand a record high last year,

that's according to the International Air Transport Association.

Marketplaces, Kristen Schwab, looks at demand and disruption in air freight.

Most of the goods traveling through the Middle East are there for a layover,

a pit stop to refuel on the way to Europe from Asia.

Brandon Fried, executive director of the Air Forwarders Association,

says 13% of air freight passes through the Gulf.

A lot of it transfers through that area because the Gulf carriers, the Middle East carriers,

have tremendously significant air cargo programs.

In part because of their tremendously significant commercial flight programs,

about half of the goods that travel by air fly under the belly of commercial flights.

The other half goes on dedicated air cargo planes.

Usually companies that make goods that are expensive or expire quickly will pick air over sea.

We're talking pharmaceuticals, electronics, fresh-cut flowers.

So it's much easier. It's a lot shorter transit time.

Brandon, the cost is more significant.

Fried says shipping by air costs anywhere from 5 to 10 times the amount of shipping by water.

Still, companies have become increasingly willing to cough up the extra cash.

Martin Dresner, a professor of supply chain management at the University of Maryland,

says one reason has been fear about global conflicts.

You know, there's issues in transiting through the Suez Canal because of some hostilities,

you know, with the rebel groups in Yemen, previous to that, there's been pirates.

If conflict happens, it's much easier and less time intensive to reroute cargo in the air

than it is to say force a ship the long way around Africa.

Plus, it's a safer option than ocean shipping.

But no method is perfect. Limited airspace means limited cargo capacity.

And Brian Burke, Chief Commercial Officer at Seco Logistics,

says carriers are already dealing with messy routes.

You know, the worn Ukraine has effectively shut off Russian airspace.

And so the same flights that now fly have to fly a longer route.

There is a limit to how many planes can occupy any given route each day.

And carriers will demand higher rates.

Because essentially it becomes like surge pricing.

Add longer hours for pilots and extra jet fuel,

and you get higher shipping bills for businesses everywhere.

I'm Kristen Schwab for Marketplace.

It's easy and understandable to lose track of the fundamentals when the news environment

is as it has been.

Which is why we are here to remind you that we're in the thick of quarterly earning season

for the big retailers across this economy.

We're from Best Buy and Target this morning, both of which reported something of a slump

and holiday sales late last year.

Later this week, we're going to get updates from Abercrombie, Bath and Body Works,

Costco, and Kroger.

And how those retailers are doing, as Marketplace's Daniel Ackerman reminds us,

can also tell us a little something about the engine of this economy,

we the humble American consumer.

The holiday season can be make or break for retailers, and this past one for Target.

You know, it wasn't great.

Janet Joseph Kloppenberg of JJK Research says some of that was due to basic execution.

There wasn't enough product on the shelves.

They had stuff in the back room, but somehow it wasn't getting moved out.

But retailers also faced headwinds that were out of their control,

says Anthony Chacamba of Loop Capital.

So you have this consumer that has been

buffeted by elevated inflation for quite some time.

Add growing job concerns, and consumers could remain wary about discretionary spending in the year to come.

I think 2026 is going to be a slog, just like 2025 was quite frankly.

Chacamba says oil prices are already rising due to the war in the Middle East,

which could further strain consumers and retailers alike.

But there are some opportunities for retailers,

says Jessica Ramirez of the consumer collective.

Those include beauty products and work attire.

In a time where the consumer is concerned about holding onto their job,

they will be wanting to dress to impress and feel good.

Many Americans will also see higher than usual tax refunds this year.

Says Janet Joseph Kloppenberg of JJK Research.

Usually we don't see the consumer save when they get a little treat.

We see them spend it right away.

That could provide a temporary boost for retailers.

I'm Daniel Ackerman for Marketplace.

Coming up.

And then when we're ready, when we have all that feedback,

we can blast it out more widely and get you all those eyeballs.

Thank you, no.

First though, let's do the numbers.

Dow industrials down 403 to the day,

eight tenths of 1%, 48,501,

the Nasdaq down 232 points, about 1%,

finished 22,516.

In the S&P 564 points, 9th 10th percent, 68 and 16.

Believe me, when I tell you, it was way worse early in the going.

Daniel Ackerman was just talking about retail sales.

Target reported better than expected profit last quarter.

Jumped six and seven tenths of 1%,

best by missed quarterly profit expectations.

Also a lackluster holiday season.

But the electronics retailers still beat earnings estimates for the past year.

Best by climb seven percent.

America's second biggest retailer.

Second out Amazon.

Walmart rose six tenths percent.

Bonds down yield on the 10-year T-note up.

4.06 percent.

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This is Marketplace.

I'm Kai Rizdal.

We're going to get the latest report on light vehicle sales.

That's cars and SUVs and pickups.

It's coming from the Bureau of Economic Analysis tomorrow.

Best guesses are that February will have been a bit better than January was.

Auto sales have been, in a word, volatile the past couple of years.

COVID-induced shortages, which of course you remember, followed by surging demand,

and then tariffs topped by people rushing to buy before EV tax incentives went away.

So Marketplace of Mitchell Hartman takes a look now at what's in store for

motor vehicle sales in the 2627 model year.

Auto sales flagged late last year and into January.

But says Aaron Keating at Cox Automotive.

So far, February sales from manufacturers look pretty good.

Now, in the first week of March, consumers are seeing war in the headlines.

We've just had a big weekend of disruption.

Consumer sentiment has continued to be volatile and sags quite a bit with

phenomenon we're calling and other people have called uncertainty fatigue.

That might give consumers pause before buying a new car or pick up.

The average price of which stopped $50,000 late last year for the first time ever.

Though so far, price alone hasn't dissuaded many buyers, says Carl Brower at iccars.com.

I've been amazed at the level of new vehicle sales.

Vehicles have gotten extremely expensive and people keep buying them in spite of that.

Brower says it's an effect of the key shaped economy.

A lot of people can't afford a new car any longer.

But enough can.

People who are just wealthy, people who are wealthy and their kids aren't wealthy,

but they help them out.

You know, they're like, well, I'll help buy you the car.

Meanwhile, tariffs haven't ended up pushing new vehicle prices much higher,

says Michael Brisson at Moody's Analytics.

Auto makers, they did eat a lot of the tariffs.

They were coming from a very high profit range.

So they were able to take a hit to their margins.

Plus, mortgage rates are down and tax refunds are up.

So consumers may have more room in their budgets for a new ride.

I'm Mitchell Hartman for Marketplace.

Of the many decisions parents have to make, one of the first,

after deciding to actually have a child, is child care.

It's often expensive and in some parts of the country, rural areas in particular,

it's hard to find.

The left-leaning Center for American Progress says something like

60% of rural families live in child care deserts to find

as three young kids for every slot that's available.

Lee Patterson visited a mountain town in South Washington,

Colorado that's trying to close that gap between kids and care.

Six-month-old Daisy wakes up from a nap with pink cheeks and spiky hair.

Because she is so cute.

She knows it too.

Sarah and Adam Hachtel are picking her up from Urey family child care.

Located in a little town down near Telluride.

When did she start here?

Today.

Today is her first day?

Yes.

How did you go?

Great.

Yeah.

It went wonderful.

Yeah.

Baby Daisy got a spot here for the winter.

Adam remembers what things were like before they found this place,

back when their older son was young.

A lot of driving.

With few full-time options close by, these parents would spend nearly three hours a day

getting their son to and from daycare.

And this is not unusual.

Survey data shows that for four out of five parents here,

child care falls short, especially for babies and toddlers.

It's unaffordable to live here so you have to work full-time.

Or we have to at least, I don't want to speak for everybody,

but without child care, that's not possible.

And so we'd have to move somewhere else.

Last year, working families got some relief.

When this daycare and another opened just down the street from each other,

in a new affordable housing development.

What makes this different from regular in home daycare

is that the houses were built specifically for it and pre-licensed

with the necessary fences, ramps, and square footage.

They're part of a local project,

naming to address the shortage of child care and housing all at the same time.

The region's early childhood council recruited and trained providers.

The builder reduced costs through grants, state dollars, and low-cost construction loans.

Melissa McCristen operates Urey family child care.

This is kind of our craft, flesh, eating area.

Her tidy white house sits on the Uncompagray River,

mountain peaks, loom in the distance.

McCristen points to her living room.

They do naps over here because it's cozy.

McCristen applied to live and work in the home.

She got a large grant to buy tiny tables, bookshelves and cubbies,

but it's been a rollercoaster.

I mean, it's ups and downs with the unknowns.

She's had to learn billing and scheduling.

Enrollment was slow at first, but now I'm probably set with babies

and then with a wait list for three years.

Efforts to create more in-home daycare spots

are underway in other rural communities in states like Kansas and Minnesota.

Here in Colorado, Urey's second daycare is located on the same street as the first one.

A stray up high, it runs tiny Colorado treasures,

staying open 11 hours a day plus some weekends.

Business is going really well, but the other part of this project,

the home ownership part is more complicated.

My initial plan was, you know, living the home for two years,

which is great and then buy it, but that's just not realistic.

These two providers get subsidized rent with the option to buy,

but the rent goes up every year.

And with the cost of living and running a business,

pie it just can't save enough for a down payment.

She's still hoping to buy, eventually,

same formalist Macristian of Urey family child care.

Thanks for having me with us.

As she helps the hack-tool family try to get out the door.

Can you see my friends?

Bye.

Macristian shares some good news.

We have a full-time spot open.

So I wanted to offer it to me for a full-time spot for baby Daisy,

starting in the spring.

Took Daisy one day to win you over that much.

Amazing news, they say.

Bye Melissa, see you tomorrow.

So while this experiment hasn't completely solved the area's child care shortage,

this family is driving home happy.

In Urey, I'm Lee Patterson for Marketplace.

Our parting words on the program yesterday were about how everything that's going on right now

is affecting the housing market.

To wit, pushing the average 30-year fixed rate mortgage back above 6%.

If you pull back a bit though, there's even more that's complicating the world of home buying today.

We've gotten used to being able to find pretty much every home for sale.

We might be interested in with a quick girl search and then a bunch of brokerage websites, right?

Last week, though, Compass, the biggest real estate brokerage in this country,

said it's going to be now showing exclusive home listings only on Redfin.

This is the latest development in an ongoing battle over digital home listing,

specifically between Compass and Redfin's competitor, Zillow.

James Rodriguez wrote a banner for Business Insider. Welcome to the program.

Thanks so much for having me.

This thing, this Zillow ban and all these little hutsuits,

what in like 45 seconds is going on here?

This is really a fight for control of real estate listings,

and it could determine where you find your next home,

whether it ever appears on Zillow at all.

You have, on one side, the country's largest brokerage compass,

which has been essentially advertising homes in some places, but not others.

It's been advertising homes on its own website or in private databases,

but not sharing them more widely, at least initially.

And you have Zillow saying, hey, if a home is advertised somewhere online,

it should be everywhere.

And so they've instituted these rules that effectively could ban some listings

if they're not advertised properly.

What this basically means is that homes are,

you have the real estate market essentially fracturing where homes may be listed somewhere online,

and not other places.

Well, let's take it away from these two behemoths,

and whatever's happening with the overall home buying ecosystem,

which is, which is enormous in this country,

and hugely important to individual wealth.

What does it mean for me, if first of all,

I'm a would-be seller of a home?

Well, typically when you list your home for sale,

your agent will put it in a local database known as the multiple listing service,

MLS, and that's going to blast it out everywhere.

It's other brokerages to agents,

and these big portals like Zillow, realtor.com, homes.com.

And that effectively gets as many eyeballs on it as possible.

You have some brokerages like Compass that are saying,

hey, it's actually not good for you if you go that route.

They're saying it's better if you initially advertise it

among a smaller crowd.

You kind of build this interest.

You don't have days on market building up.

You don't have price cut, history shown publicly.

And then when we're ready, when we have all that feedback,

we can blast it out more widely and get you all those eyeballs.

And people on the other side of things are saying,

hey, this will create this fractured marketplace,

where homes may be hidden in some places,

or you might not have a good sense of what's out there,

and for buyers that could be a more complicated scenario.

Right. So let's talk about what it means

for people who want to actually buy a house.

There are houses out there that I can't see.

Is that what you're telling me?

Yeah, and that's always been to some extent.

As well.

You know, you have agents that have good relationships

with sellers in the area.

But if we see things change to where, you know,

the Compass model and other big brokerages

have sort of either soft-launched this strategy

or threatened to follow suit,

what you could have is your choice of an agent

would be a lot more fraught.

You might have to consider, you know,

to what extent are they able to unlock the marketplace for me.

So at the end of the day,

it could be a more complicated home search.

One does imagine that this

agglomeration of real estate brokerages and companies, right?

I mean, Compass owns a bunch, Zillow is huge.

It all just becomes power and wealth

and market power concentrated in the hands of one,

maybe two giant real estate companies.

I think that's the thing you have to look at here

is that every company, you know,

they present these moral cases for,

you know, home should be listed everywhere

or sellers should have the choice of where to list their homes.

Every company involved in this fight

has a huge financial stake in this,

as one long-time real estate executive told me,

listings are fuel.

And so this fight for listings

is really at the heart of the real estate market

and it could determine,

you know, what kind of market do we have?

Is it a place where you can go to any website

and get a pretty good feel for what's out there?

Or are you really going to have to be a lot more careful

about your search and think about who your agent is,

what websites you're visiting,

what other, you know, alternative methods

you need to pursue to find your dream home.

It could just be a lot more complicated.

Right.

James Rodriguez at Business Insider.

James, thanks a much.

Appreciate your time.

Thank you.

All right, we've got to go too much news.

Not enough time.

Jordan Mangies on Ilma Haraj,

Janet Wind, Olga Oksman,

and Virginia K Smith are the digital team around here.

Part of it.

Anyway, I'm Kyle Rizzo.

We will see you tomorrow.

This is APM.

America's housing system is under strain

from natural disasters to the rising cost of shelter.

The challenges we face and the solutions we embrace

will shape how we live for the next 100 years.

I'm David Brunkaccio,

host of the Marketplace Morning Report.

And I've been working with this old house radio hour

on a special podcast episode

that explores how Americans are reimagining housing

in this changing world.

It's called Building Tomorrow

from wildfire resistant houses in California

to tiny home communities in Texas

to a super duper energy-efficient house in the Northeast.

This special blends innovation,

new business models,

and personal stories to explore how resilience,

affordability, and our climate reality

are redefining what home looks like.

To listen, go to Marketplace Morning Report

in your podcast app.