Krystal and Saagar break down the economic outlook, Biden’s inflation speech, Elon’s speech comments, baby formula shortage, the new Biden Press Sec, diesel fuel crisis, lies in the abortion debate, and a discussion of the NLRB lawsuit vs Starbucks with workers!

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Timestamps: Economy: 0:00 – 27:45 Biden: 27:46 – 40:34 Elon: 40:35 – 47:53 Baby Formula: 47:54 – 57:42 Press Sec: 57:43 – 1:06:46 Saagar: 1:06:47 – 1:17:16 Krystal: 1:17:17 – 1:28:11 Starbucks Workers: 1:28:12 – 1:39:48

5/10 NEWSLETTER: US Economy, Biden’s Speech, Elon’s Rules, Baby Formula, Press Sec, & More!

Welcome to the premium newsletter for Breaking Points with Krystal and Saagar that summarizes all the information in the 5/10 show. Welcome to the Supercast email, the new email provider for the show going forward that has replaced MailChimp. If you have any issues with this arrangement, feel free to reach out to james@breakingpoints.com or comment on the YouTube show.

Now onto the contents of the show.

ECONOMY

Krystal and Saagar begin the broadcast today with an extended conversation about the US economy right now, which is being hammered by a multitude of factors. Inflation, geopolitical instability, supply chains, federal reserve policy, and other factors have some predicting a recession for America in the near future. The impact is also being felt in the stock market as the S&P 500 dropped on Monday to its lowest total in 2022 so far. The NASDAQ fell another 4% and the Dow Jones Industrial Average fell 600 points. Sectors hit the hardest were tech, energy, banks, and manufacturing just to name a few. Large companies including Facebook, Amazon, Caterpillar, Boeing, and others took hits as part of the most punishing market selloff in years according to the linked Wall Street Journal write up. The Journal also provided analysis on the Fed interest rate hikes, that they say will be good for banks unless they are raised enough to generate a recession. Stocks of the major global banks have slumped in 2022 even though interest rates rising is good for them due to investors believing that rate increases could lead to a recession if done to fast or too drastically. Banks benefit from higher rates by being able to charge more for loans while collecting higher interest on idle cash.

The dramatic drop in tech stocks and renewed pessimism among tech investors has drawn attention and scrutiny to the shifts in the sector. April 2022 was the worst month for the tech heavy NASDAQ stock index since the 2008 recession with inflation hitting the balance sheets of these companies and booms in earnings during the pandemic coming to an end. Stocks for the biggest tech firms have seen significant drops this year; Apple shares are down 16%, Microsoft stock is down 20%, Amazon has tumbled 35%, and Facebook has declined by a staggering 40% forcing the company into a hiring freeze. Amazon posted a $3.8 billion loss in the first quarter of 2022 caused by growing costs and slowed growth.

Likewise, the crypto markets have been hit hard by the economic turmoil, with Bitcoin down 55% from its November peak causing 40% of investors in the cryptocurrency to be underwater. The drop was a ripple effect of the drop of the third largest stablecoin TerraUSD from one dollar to 89 cents. These stablecoins are pegged to the US Dollar through various financial engineering tricks and underlying assets. The Wall Street Journal article linked goes into more details about how the stablecoin drop is hitting crypto markets at large particularly Bitcoin.

BIDEN

Related to the previous block, President Biden is set to deliver an address on inflation as prices continue to rise and CPI data for April is set to be released on Thursday by the Bureau of Labor Statistics. Part of the President’s speech will be dedicated to attacking the GOP plans released by Sen. Rick Scott of Florida that could raise taxes on the middle class and sunset entitlement programs like medicare and medicaid. Joe Biden is making his pitch to the American people that he has a plan to combat inflation and drive down prices as economists predict a slight drop in the inflation rate from the historic March highs. The Federal Reserve recently announced an increase in the interest rates that also has the potential to bring down prices at the expense of unemployment. Democrats are hoping that Biden will be able to counter the GOP’s attacks on him for rising prices and reverse the polls that show Americans have more trust in the Republicans on the economy by a large margin. Inflation has fueled the low economic confidence held by Americans based on Gallup data from the end of April. Other important measures from that data set include the 39% of Americans who rate the economy as the most important issue facing the country and the cost of living listed by 17% as the biggest problem facing the US. Gallup’s Economic Confidence Index has been in negative territory since July 2021 and over three quarters of those surveyed believe that the economy is getting worse. These problems could be exacerbated by a potential government shutdown being threatened by conservatives to fight the DHS ‘disinformation board’ recently instituted to much controversy. With all of these factors in play, the economy will continue being top of mind to the American people and to Breaking Points coverage of the news.

ELON

Elon Musk has made plenty of friends and enemies with his outspoken support for more free speech online that led to his purchase of Twitter to begin with. When Musk Tweeted some details on how he plans to govern the platform under his ownership, eyebrows were raised after this tweet responding to commentator Mike Cernovich. In the linked Tweet, Musk stated that ‘Like I said, my preference is to hew close to the laws of countries in which Twitter operates. If the citizens want something banned, then pass a law to do so, otherwise it should be allowed.’ This implies that foreign governments with strict speech laws could implement harsh controls over speech through Twitter in their respective boundaries, in direct opposition to Musk’s professed belief in free speech. Breaking Points collaborator Ryan Grim replied with the point that Musk’s Twitter policy would lead to increased censorship by foreign governments of posts by their citizens who use the platform. For those not in America that could create a dramatic escalation in online censorship on Twitter, in contrast to Musk’s stated goals. From now until Musk officially takes control of Twitter he might be tempted to rethink this statement due to the valid concerns that were raised, but until he does Musk will receive scrutiny from Krystal and Saagar for his ties to foreign governments and how that could affect Twitter moderation policies.

BABY FORMULA

Of the many supply chain issues hitting American consumers, baby formula has become the most important one that nobody is focusing on. That is why it is the subject of the D block of today’s broadcast after reports broke saying that 40% of America’s baby formula supply is out of stock. This number spiked from the 29% shortage reported for March of this year, with no end in sight. The shortage has been particularly rough for those living in Southern states like Texas, Tennessee, Missouri, and South Dakota who are seeing shortages of up to 50% of stock. Metro areas within these states have been hit with even higher shortages up to 57% in San Antonio and 52% in Nashville. CVS, Target, and Walgreens have had to place restrictions on orders and purchases for customers in a move to limit the damage being seen in stores and online retailers. A recall by Abbott Nutrition after infants were killed has exacerbated the problem and the company has stated it is working closely with the FDA to re-open plants that were closed due to the production of the recalled formula that was contaminated. Senator Tom Cotton (R-AK) has called on the Biden administration to take action alongside the FDA to get the crisis under control. A shortage in baby formula is a story with massive implications because infant formula is a major source of nutrition for babies that can’t be replaced, and inadequate nutrition can have serious long-term health consequences for the babies affected. This national crisis of baby formula shortage will continue to affect families with infant children in the near future and Breaking Points will surely track it as more information comes out.

PRESS SEC

The incoming Biden White House Press Secretary Karine Jean-Pierre who is replacing Jen Psaki at the end of the week is now the subject of intense scrutiny as she prepares for the spotlight. The scrutiny that comes with her elevated role in daily political affairs has led to the discovery of some questionable claims she made in the past as a media pundit, including the false claim that Stacey Abrams had the 2018 Georgia Governor’s race stolen. She also promoted the now debunked Russiagate conspiracy theory, praised Andrew Cuomo’s pandemic response in NY State, and backed false claims about Justice Brett Kavanaugh among other inflammatory statements she made in her past. The story matters because Jean-Pierre’s deep media ties and demonstrated promotion of false claims will spark questions about her integrity and suitability for the role as Press Secretary. Becoming the chief mouthpiece of the executive branch brings a new level of significance to what one says and believes, which is why her record matters going forward. It could also affect how she handles the press in answering questions and choosing who gets to ask questions to begin with, especially because her longtime partner Suzanne Malveaux is a CNN national correspondent and anchor. This major conflict of interest is likely to generate even more scrutiny of Jean-Pierre and her past behavior after outgoing Press Sec Jen Psaki drew ethical concerns for her negotiations with NBC while she has been working for the administration. Krystal and Saagar will cover the new Biden Press Sec with the same critical eye that they have applied to Jen Psaki during her tenure now and in the foreseeable future.

SAAGAR

In his monologue today, Saagar shines a light on the crisis of diesel fuel after he questioned on the show yesterday the complacency in addressing gas prices. The public was supportive at first before people knew how long and drawn out the Ukraine war would get; it looks like the war could go on for months in the Donbas region. The sustained high gas prices function as a tax on working class Americans especially those who drive frequently and live in west coast states. The gas prices have flatlined at high levels, unlike the diesel prices that continue to rise to record levels. Implications of the diesel price surge will be felt by consumers at the grocery store, hardware store, and everywhere else because of its usage by the trucking industry seeing a labor shortage in truckers. The shortage of diesel is a story of globalization as the supply chain crunch has hit diesel imports to the point where New York Harbor is seeing 200 dollars per barrel. It has also been impacted by the European decision to stop importing Russian petroleum and the lack of American investment in its domestic capacity. When a unit at a Philadelphia refinery was burned to the ground, it did not get rebuilt despite being the largest one on the entire east coast of the US. Expenses across the board will continue to rise in ways that will not stop anytime soon and are already hurting people in big ways with the most vital resources. There could even be blackouts over the Summer caused by a projected surge in demand from the heat that will not be able to be handled by current capacity. Energy prices could skyrocket in this case at the same time Americans see blackouts in what would be a glaring sign of national decline. The lesson here is in the failures of globalization and pricing commodities based on global markets while cutting domestic capacity for the sake of profit. Solutions seem bleak in times like these but the first step is knowing the problem is there and what is causing it in the first place.

After the monologue, Krystal and Saagar talk about how the corporate incentives and failures of the US government to produce domestically has gotten us to this point. There is no plan from the administration or anyone to get us out of this mess, including the Fed raising interest rates. It is a supply crunch much more so than an issue on the demand side in almost every industry where fragility was built into a global economic system to maximize profits at the expense of national security and domestic resilience. Saagar makes the pitch for practicality over ideology in times like these to sort the economic problems out that should be prioritized in the short term.

KRYSTAL

In her monologue today, Krystal issues another critique of the abortion culture wars and Democratic Party failures in addressing issues core to its own base. Nancy Pelosi wrote a letter to Democrats asking them to fight the SCOTUS coming decision to overturn Roe v. Wade and fight what she deems an extremist decision by GOP Justices. She vowed to fight for Roe to be codified into law to give women the freedom to choose whether they’d like an abortion or not. Democratic colleagues and media figures saw straight through her words because she has been part of Democratic majorities and liberal politics for a long time without taking the opportunity to make the decision into law, one of many issues Dems have let voters down on. The party leadership is currently campaigning for pro-life Democrat Henry Cuellar in Texas in a contested primary with a progressive challenger, showing how hollow they are on the issue. Culture war hollowness is not solely confined to Democrats given that within the mainstream GOP, the pro-life agenda does not go beyond banning abortions.

Many poor women seek out abortions primarily for financial reasons like the costs of maternal care, child care, home ownership, and other vital life expenses. Middle class jobs have been shipped off overseas and the economic system stopped serving lower income families. Christian conservatives have been in an alliance with free market business communities for a generation to secure victories in the courts, leading to an economy that does not serve families and makes bearing a child an incredibly costly endeavor. Family units have been suffering from economic difficulties and the lack of good jobs much more than any culture war issues. The difficulties will not be felt by the well off liberals or conservatives who do not have to worry about the economic aspects of the abortion debate. None of these issues receive nearly as much attention or scrutiny as the abortion issue that has split the country into raging sides while oligarchs laugh to the bank.

After the monologue, Krystal and Saagar talk about how corporate power and economic populism has been sacrificed by the right for the sake of the abortion issue, and that the majority position is in between both sides of the debate. Most Americans are not diehard pro-choice or pro-life people and believe that there is more to life requiring some foundation of financial security. If your core values are family values, there requires much more to it than getting your way on abortion and making having children more affordable will be as beneficial to life as anything else.

STARBUCKS WORKERS

Krystal and Saagar are joined by two Starbucks workers and union organizers to check in on the escalating unionization battle between baristas and the company that is now the subject of a major National Labor Relations Board lawsuit. The NLRB alleges systemic violations of US labor law by the company in its efforts to counter the growing unionization movement in stores across the country. The lawsuit was sparked by the firing of labor leaders from a store in Phoenix, Arizona who had been harassed before their eventual termination. The Starbucks Partner Guide that consists of strict rules for workers is views by the NLRB as a functional gag order on the workers because of the interference these guidelines have in union activity. The NLRB previously charged the company after it improperly fired seven union leaders in a Memphis store and Starbucks Workers United has filed 114 unfair labor practices against the company in the past few months. This labor fight has been consistently covered by Breaking Points since the first store unionized in Buffalo, NY and previously had on workers from the company who described the anti-union tactics as ‘psychological warfare’ against them. The labor battle between Starbucks and workers leading union drives will continue to be covered frequently on this show as workers fight for power in their stores.