Nvidia's record-breaking stock buyback

Where is this economy going? Oh, wouldn't you like to know? From American Public Media, this is Marketplace. In Los Angeles, I'm Kyle Risdell. It is Monday. Today, this one is the 28th day of September. Good as it always is to have you along, everybody. The first couple of minutes of the program today are going to be about time, about where the economy might be going and about where it has been. It is often said here and elsewhere that if you want to know which way the economy is going, the bond market is where you ought to look. And with the caveat that, yes, we have been doing a whole lot of bond stories the past couple of weeks, the story that the bond market is telling us just doesn't matter. The bond market just keeps being reinforced. Business activity is strong. Government debt is high. The geopolitical narrative is unclear at best. And so today, bond yields across the curve. That is, the interest rate the government has to pay on almost all of its notes, bonds and bills, those yields were up, again, in some cases to 19-year highs. So at the very least, the economy yet to come is going to be more expensive. We are also going to learn some things about the economy that was this week. On Wednesday, we'll get what was, once upon a time, the Federal Reserve's preferred measure of inflation, the Personal Consumption Expenditures Price Index for the month of August. We'll get data on home prices. That's coming from Kay Schiller. And a whole bunch of data on the labor market, the job openings and labor turnover survey. That's jolts, right? We talk about that all the time. It comes tomorrow. ADP's private sector employment data comes on Wednesday. Weekly first-time claims for unemployment benefits on Thursday, and then Friday, the biggie, the September jobs report. So, marketplaces met the fields. Ask some economists what they're going to be looking for in all of that data. Last month's jobs report was surprisingly strong. It showed the economy added more than 162,000 jobs in August, up from just 21,000 in July and 31,000 in June. The big question is, was that a blip? Or was that, the data trying to tell us that things weren't so bad? Justin Wolfers at the University of Michigan says that's what he'll be looking to see when the September report comes out this week. The most important thing is not to overreact to any one number. There's always volatility in the data, which is why Heidi Sheerholz at the Economic Policy Institute says you want to look at the last several months together. What we've seen recently is that the labor market is okay. There's like good news and bad news. The good news is that the unemployment rate is low. It's hovering just above 4% and has been for a while. Job growth is solid. Not great, but it's solid. Layoffs are low. So, if you have a job, you are no more likely than usual to get laid off. So, that is very good news. The not-so-good news, Sheerholz says, is that wage growth is weak and there's not much hiring going on. We're talking now about hiring rates that are roughly where they were in like, 2010, 2011, in the just unbelievably weak labor markets right after the Great Recession. You can see that in the growing number of people who are long-term unemployed. That's a number Breon Williams at the Groundwork Collaborative will be paying close attention to this week. We have right now more than a quarter of our unemployed workers that have been out of work and looking for work for six months or longer. And I think that that's a troubling sign. A sign of weakness and an otherwise. Fairly solid job market. I'm Samantha Fields for Marketplace. Wall Street today, sell, sell, and sell again. We will have the details when we always have the details. On a generally grim day for technology stocks, NVIDIA did all right for itself. Shares up almost a percent and three quarters for the session. Of course, it does help that the company said it's going to spend $150 billion to buy back more of its own stock over the next couple of years. That's on top of an $80 billion buyback already announced, and it does beat Apple's buyback record. Basically, what's happening here? NVIDIA is generating just a whole pile of cash that it has to do something about. And as Marketplace's Megan McCarty Carino reports, that is a sign of the changing technology landscape. There are a couple ways a company can return cash to shareholders, says Nick Guest, an assistant professor of accounting at Cornell. It could pay a dividend for every share. They tend to be regular, and the market tends to build up an expectation for them. So if you pay a dividend this quarter, you're going to pay at least that much in future quarters. Or it can buy shares back. And that's a sign of the changing technology landscape. Guest says that's seen as more flexible, so it's become the favored way for companies with excess profits to share them. They said, hey, we don't have that many investment opportunities. We can't use all this cash right now. So we're going to give some of it back to you investors, and then you can decide what to do with it. Apple has been the leader in stock buybacks, but Alphabet, Meta, and Oracle also spent heavily to repurchase their own shares, says Eric Gordon, a business professor at the University of Michigan. We're seeing something I never thought we would see, which is tech companies, which formerly were just bringing in the cash, now are spending huge amounts of cash on AI. The companies spending big on data centers have seen the build-out eat into their free cash flow. Some are selling new stock, and most are borrowing to fund construction. Companies are filling the dump trucks with money and sending it to NVIDIA to buy their chips. NVIDIA is getting dump trucks of money every day. That's why it can do stock buybacks. Of course, NVIDIA doesn't have to buy back stock with its excess profits. Jacob Bourne, a tech analyst at eMarketer, wonders if the company could spend the money on something else. Why is this the best bet for NVIDIA right now, as opposed to, you know, acquiring more AI startups or investing more in chip development? But NVIDIA is doing it. Doing those things, too, says Daniel Newman, an analyst with Futurum. When you have a balance sheet that looks like NVIDIA, you have the optionality to return to shareholders, and you have the optionality to invest in the ecosystem. NVIDIA has committed hundreds of billions to the chip supply chain and invested in AI companies that turn around and spend their money on more NVIDIA chips. I'm Megan McCarty Carino for Marketplace. Here is a perhaps incompletely understood fact about a very particular slice of the American economy. More than half, well more than half, of the firefighters in this country are volunteers. And? The number of those volunteers is falling. We're down 200,000 of them over the past couple of decades. Almost every state has a shortage. And even though they're not getting paid, the volunteer firefighting workforce does have some of the same problems the regular labor force does. Marketplace's Caitlin Tan takes us to rural western Wyoming. Outside a fire hall in Sublet County, six seasoned volunteers gather for their semi-monthly training. Instructor Justin Hamilton stands alongside a miniature, unpainted, wooden house propped up on sawhorses. This is a two-story dollhouse, essentially like a two-bedroom. Bedrooms are upstairs. A volunteer in his brown and yellow uniform grabs the nearby torch. I'm going to go ahead and have Eric go ahead and ignite it. And we will let it build up. Smoke billows out. Eric opens and closes the doors to simulate different flows of fire. So with a fire like this, how many people do we got to have to go inside? Four or five. Five. One on the five, one on the six. Ideally six. You've got four. Can you go inside? No. What can you do? External. External. Hit it hard from the yard. This is a real scenario they practice for. So has there been times you guys have to change your strategy because you don't have six guns? Every fire. Pretty much. Partly because it takes a while to get anywhere here. Sublet County is about the size of. And sometimes the volunteers are busy with their day job. Like Jason Reif, who's a local rancher. You know, I might not make that call because I'm out doing something or I'm horseback. If I'm horseback, then I'm not making the call. So Reif needs other firefighters to back him up. Ideally, the county needs a hundred volunteers. We need a lot of redundancy, which is why the numbers need to be so big. But they're short about 20. If we don't have volunteers, we're pretty much sunk as a county. And there's no one coming if you don't volunteer to do this. And volunteers are the only way the vast majority of Pirate Reporters departments in the country can afford to do their work. That's according to Steve Hirsch, chair of the National Volunteer Fire Council. The Volunteer Fire Service is saving billions, and I'm talking about billions with a B, billions of dollars for the taxpayers of this nation. Nationally, total volunteer firefighter numbers are down about 25 percent since 2008. There's just so many demands on people's time that I think that's our problem. These days, many people who might otherwise volunteer are working a couple jobs to make ends meet while trying to keep gas in their cars and afford child care. Plus, volunteers have to make time for mandatory training. Joe Maruca is the retired fire chief in West Barnstable, Massachusetts. He says it was especially hard to recruit young volunteers. The economics and the lifestyle of the 20-something in today's world doesn't allow this. Magnet approach. Like requiring strict training schedules. So he had to get flexible to bring more people on board. Maruca remembers it meant keeping odd hours. I'm getting phone calls from people. Why is the fire truck driving around town at 830 at night? What are you doing? What's wrong? I said nothing. They're just practicing. Over a couple decades, Maruca doubled the size of his team. There's other recruiting ideas out there. New laws in Wyoming pay state employees for 24 hours of leave to fight fires. And in Sublet County, after a focus on recruiting, they're still short but no longer declining. The newest recruit, Luke Nagel. How old are you? 16. Wow. Nagel is part of their cadet program. He's two months in. It's not too hard because I can't make it to most of the calls because of school and stuff. And then some of the calls, I'm just not allowed to go on. When he completes his training and is 18, he'll be fighting fire with the rest of the crew. In Sublet County, Wyoming, I'm Kaitlin Tan for Marketplace. So environment is usually something you prepare for over decades. 401ks and pensions and saving plans, the whole smash, in order to set yourself up for life after work. Sometimes, though, the decision to stop working comes earlier than expected, and it happens for reasons well outside your control. Here's today's installment of our series, Clocked Out. I'm Emily Vassilio. I just turned 60, and I live in St. Paul, Minnesota, and I am currently not working. I won't say retired. A year ago, I was living in Chicago for 27 years, and just life was going very smoothly until the end of September-ish. My dad was diagnosed with dementia. We found an apartment, sight unseen, and by mid-December, I was here in St. Paul. At that point, I was working for an organization that had been remote, fully remote, for six years. So I didn't realize my job was on the line until into the spring, where there was an announcement that everybody would need to come back to the office, RTO, two times a week. And then I was told that because I could not meet that requirement, I would not be able to stay there. So I was terminated. So there was a lot of upset and a lot of concern about what I was going to do financially. I was the main breadwinner. So we had several calls with our financial planner just to, like, say, okay, we're switching gears here. I know we were planning for retirement. We did not expect it to happen this soon. I was 59 at the time. But in the end, I think it was really a gift. When the bottom drops out like that, and you weren't really planning on it, it's terrifying. You know, your whole life is built around productivity, right? So there's a lot to sort out. And for me to, like, figure out who I am again, returning to a place I haven't lived in in 40 years. I'm taking Italian, so I'm trying to keep the brain alive. I get out and I walk every day. We're doing old Minnesota things, like going to the state fair and reacquainting myself, with my people. I know that there's more ahead for me. I have more to contribute. And I will figure that out once I figure the city out and where I fit in it again. Emily Vassilio. She's in St. Paul, Minnesota. Share your story, would you, of leaving the labor force voluntarily or otherwise at Marketplace.org. Coming up. Some malls that are dying and will be dead. Rest in peace? First, though, let's do the numbers. Dow Industrials down 347 points today. That's two-thirds of one percent. Finished at 51,481. The Nasdaq subtracted 248 points. That's nine-tenths of a percent. There. 26,820. S&P 500 down 59 points. A little bit more than three-quarters of one percent. Seven, six, eight, three. There. In video, we talked about its competitors fared from bad to worse. Broadcom subtracted nine-tenths percent. Advanced Micro Devices, AMD, deleted three-and-six-tenths of one percent on the day. The Trump administration has rolled back fuel efficiency rules for new cars. The old rule required carmakers to hit a little bit better than 50 miles a gallon by 2031. Now, just a little bit better. But under 35 MPG. General Motors slipped two-and-four-tenths percent. Ford Motor down 2.6 percent on the day. Bond prices down. Yield on the 10-year T-note. Hang on to your hats, people. 5.23 percent. You're listening to Marketplace. This is Marketplace. I'm Kai Risdahl. We begin this part of the program with another look at the calendar and also the observation in which I am completely certain I am not alone, that it is way, and I do mean way too early to even start thinking about holiday shopping. The cold hard truth, though, is that businesses have an annual timetable, and that timetable says the time is right now to really start digging in on the holidays. Adobe released its online holiday spending predictions today. Online sales in this year have gone up almost 7 percent from a year ago. But and however, to get that $275 billion worth of stuff to us, the humble consumer, is going to take a whole lot of diesel. You see where this is going? Marketplace's Elizabeth Troval sure does. American consumers are not in the jolliest of spirits as we approach the holiday spending season. Sophia Begg is with Morning Consult. As gas prices go up, we're going to have to wait and see. We're going to have to remain elevated. Consumer sentiment continues to drop or stay fairly depressed because it just makes people feel really bad about the economy. Consumers are cranky, but that doesn't mean they've stopped spending. John O. Chacoon is with the Richmond Fed. Discretionary categories still remain strong. The thing that's really surprising is how resilient spending has been in categories that should be really sensitive to high fuel prices. He says consumers are still splurging on things like foreign travel, vehicles, and eating out. And that bodes well for holiday spending. Though Sophia Begg says the caveat is for low-income consumers, whose budgets are getting tighter. There's some household finances pressures that's going on, and that, in addition to gas prices, I think could impact holiday spending going forward. Retailers may feel the pinch this holiday season. That's because of high diesel prices. Debnil Chowdhury is with S&P Global Energy. The cost of goods and shipping is higher. And the issue is retailers will have to decide, do they pass those costs on to the consumers? If they're selling something that's extremely price competitive, it's harder for them to do that. And the holiday shopping season is highly competitive for retailers, says Vivek Pandya with Adobe. There's lots of pressure to bring prices down. The stakes are very high for these retailers to capitalize on these holiday season sales. To take advantage of this stronger purchase propensity on the part of the consumer. What we're really thinking is that the pricing piece, the shipping piece, all that is going to be very important for the consumer. Pandya says he expects retailers to offer discounts of up to 30% online. And retailers will have to manage those price cuts, as they also deal with higher diesel-induced shipping costs. I'm Elizabeth Troval for Marketplace. Thank you. Consider, for just a moment, the American shopping mall. Historically, the site of countless teenage hangouts, last-second holiday shopping runs, and chaotic Black Friday bargain hunting. And, it turns out, a real estate category with way more than nine lives. Mall values, the Wall Street Journal reports, are beating all ten commercial property categories, offices, multifamily properties, you name it. Six years after the pandemic very nearly did them in, malls are back from the dead. Kate King wrote about the resurrection in the Journal. Kate, welcome to the program. Thanks for having me. We have reported, I know you have reported, many times in the past that the American mall was dead. Turns out, not so dead. Not yet, not yet. So, what's going on? Well, investors are increasingly becoming convinced that malls might be here to stay. And, this is first and foremost because malls are simply doing the job of being malls. People are continuing to go to malls. Retailers are opening stores in malls and making money. And, as a result, mall values are increasing and people are more willing to buy malls or invest in stakes in malls. Who is going to malls, first of all? It runs the gamut. We see the most success at the really high-end malls. These are properties that have luxury stores, maybe really popular restaurants with long wait lists in usually affluent areas. And, where the owners have invested a lot of money in keeping up the property. It's not a tired-looking mall. It still looks fancy. Right, right. And, also, as you point out in this piece, the retailers that they're choosing to have in. And, those malls are not generally susceptible to online shopping. Right. Malls, a few years ago, definitely did go through a crisis. Mall owners will tell you it was more a crisis of perception than actual real true crisis. But, nevertheless, online retail did force closures among many retailers. So, malls, like all retail, are certainly looking to insulate themselves as much as possible from online shopping. So, they need to offer. So, that's where you see a lot more shopping experiences that people can't get online. So, that's where you see a lot more restaurants, entertainment, the types of shopping experiences, like buying a Rolex, that people prefer to do in person. Yeah. I mean, you know, there are malls here in Los Angeles that have, like, trolleys and water features and all kinds of stuff. So, it's a thing where, you know, when I go to these malls, young families, like, they're out there with the strollers and the kids and all this jazz. It's like an event. Oh, absolutely. Mall owners have really had to up their game. And that includes, like you say, events. You know, some malls have farmer's markets, entertainment, like bands, performances even. Influencers will come to malls and partner with retailers or do just kind of meet and greets in malls. So, it's a whole other ballgame now. It has to be said, we are not back to the heyday of the American mall. Numbers are still down. Right. Mall values are still far off their peaks that we saw. About a decade ago, one of the reasons that the malls that remain today are doing so well is because there have been about 200 mall closures. So, that, of course, strengthens the remaining operators when there's less competition. Let me get you back to where we started and your first answer, which was they're not dead yet. Discuss. Sure. Well, there are definitely some malls that are dying and will be dead. These are malls that are. Older, where their owners have not invested in renovating them. And also, sometimes it's just a function of the demographics of the area changed. And so, there's just not that customer base to support it anymore. So, there are going to still be mall closures moving forward. And there aren't going to be very many mall openings. No one's building big enclosed malls anymore. Right. For sure. Are you a mall person or no? I am kind of a mall person. I do go to the mall when I need to. But it's not an everyday thing. Fair enough. I hear that. Kate King at The Wall Street Journal. Kate, thanks a lot. I appreciate your time. Oh, thank you. This final note on the way out today in which we started with the cost of money, bond yields, right? Thus, we will also end with the cost of money. Mortgage News Daily has the average rate on a 30-year. fixed mortgage at 7.5%. 7.5%. I'm Eric Babawi, Caitlin Esch, John Gordon, Noya Carr, Steve Mullis, and Stephanie Seek are the Marketplace Editing staff. Kelly Silvera is the News Director. And I'm Kyle Rizdahl. We will see you tomorrow, everybody. This is APM.