Tony Katz & Dr. Matt Will on Growing Economy & Ratepayer Protection

0:00The all-new 2026 Toyota RAV4 is here, building on everything drivers know and love about Toyota, with a redesigned look and modern tech that makes life behind the wheel easier than ever. The new RAV4 comes standard as a hybrid, providing smooth, efficient performance for both city streets and longer journeys. Enjoy the legendary reliability Toyota is known for in the all-new 2026 RAV4. Learn and shop more at toyota.com. Toyota, let's go places. Four has an effect on the economy. We'd be fools if we said otherwise. Tony cats, Tony cats today good to be here, good to be with you, and we're seeing a lot of economic indicators that are coming out, but some of these things are trailing indicators means it happened a month ago or two months ago or three months ago and has nothing to do with what's happening with dropping bombs on Tehran right now and again, full disclosure in case you needed it. I'm totally fine with taking out the Iatola and I'm okay with the ripples that take place for keeping American safe

1:00long term if the regime is completely annihilated and destroyed. But there have been some good data points, very helpful data points to a guy running for re-election, no, not Trump. Republicans running for re-election and Trump trying very hard not to be impeached for a third time. Dr. Matt Will joins me right now economist at the University of Indianapolis. Sir, there's a host of things that are happening and I want to get into it, especially with this whole right-payer protection pledge, which you are very excited about how manufacturing is ticking up for the second month in a row. But let's start with wars and the economy. One can argue that historically wars have been very good for the economy. I don't think we look at what's happening with Iran in that same kind of way. Talk to me about what it is you think America should expect or other nation should expect. And is this a one month, is this a six months? Does it depend on how

2:03long the bombing goes on? What say you? You know, it's interesting because wars are not positive for the economy. What they do is they shift the economy. So Trump deserves a lot of credit for actually doing something that will cause some harm to the economy and thus make potentially hurt them in the midterms. Because what you do is you shift your manufacturing. So you go away from, you know, it's like guns versus butter. You go away from the butter back into the guns. So right now, in fact, today they're meeting with people in the defense industry. They're encouraging them to do more munitions production because that's going to be the big issue. Expanding their production facilities in order to produce more product. They've got to change their distribution and logistics on how they distribute all these munitions and materials for the war effort. And so that takes away from your private economy. It happens. We sought during COVID when we started taking GM to make masks and ventilators. So it's not positive for the economy. It shifts it. And Trump Trump deserves credit for doing biting the bullet and making a tough decision that's not going to

3:05be the best economic decision. And I do agree with that wholeheartedly. The thing that we're hearing most about is supply line issues. If you're getting pharmaceuticals from India, if you're getting other products from from Southeast Asia, if you're getting materials like fertilizers from the Middle East, you now have issues with the Straits of Hormuz with ships and how they're going to travel and avoiding certain areas that creates supply line issues. Is this already being seen? Is this something that we should expect to see in the markets in our pocketbooks in the months ahead or can this be easily stabilized? It'll be easily stabilized as we get the shipping lanes under control because some of the ships have already been diverted down you know down through South Africa. That's a much longer route. But it's going to be more you know it's going to get the goods there. So it causes just a delay. We are very efficient in adapting our supply chains to the current environment. And I got to tell you long term this is also good because it's going to create more

4:09safety. You know that ship that was sunk in the Indian Ocean. Have an Iranian ship out there trying to disrupt things is not good. You need escorts to take your ships through these various lanes. Well that ship is now gone. So again it's a short term pain for long term gain and I think Trump is doing the right thing because it's going to long term protect shipping lanes, distribution channels, the supply chain will be safer. But in the short term there will be disruption. That is absolutely happening. Does the market as you're seeing it right sometimes it's it was down 1200 but only close 400 down then it was up the next day. And then as I last checked at midday today it was like down 600 and that could be more at this stage who knows where it's going to end. Does the is the market trying to figure out how to bake this in how to figure out where where it's at or is this level of gesticulation based on something else. It is the market is trying to bake in everything. You know we haven't talked about yet productivity and you know the the right pair

5:12protection pledge a data centers and the war and the distribution chance. The market is just having a challenge right now getting all this information and putting it into the prices but it's trying it's trying very hard. Well let's get more into it because you're making the argument that it's not just war related talking to Dr. Matt Will economist at the University of Indianapolis data centers and this rate pair protection pledge that the president spoke about in the state of the union and you saw him signing this executive order yesterday which has you all sorts of happy. This is a giddy. This is not a doctor doom. Matt will this is a doctor giddy. Matt will what is it that you saw on data centers and on this Trump pledge. Well this I think I was the only person in the world that stood up on that particular line when you talked about you know data centers and making their own energy. I think everybody else was sitting at that moment. I love this because

6:17the problem we're having with data centers is local utilities have a monopoly on selling energy. If you're a data center in your city you can't produce your own energy. You have an agreement with the local utility that bans you from doing that. And so this sign this rate pair protection pledge which by the way that's the marquee that's the PR but the thing behind it is it allows the data centers to make their own energy and after they make their own energy they can then sell it back to the local utility. This is this is revolutionary because we're going to have a three to four hundred percent increase in demand for electricity. And there is no way the grid can handle it. There's no way the local utilities can handle it. In fact BlackRock was so excited about the demand they bought a company called AES. But let me tell you BlackRock is no you know quiet person in the corner. They go after aggressive returns because they thought they could squeeze you know the industry for more money. And Trump just put the brakes on that a little bit.

7:19Well the AES story is big where you and I live in Indianapolis because that is the power company here which used to be known as Indianapolis power and light. And there's a real question about are the Qataris involved in this is is shelters which is the California pension system involved in this. Maybe you don't want these groups having any connection. California pension system for there are just incredible levels of failures and problems and Qatar because I don't want foreign nations connected to the power grid. But this is really about the concept of SMRs small modular reactors. This is about the fact that data centers are here. Now cities and states can ask whether or not they want to be data center city or states. But they're coming and they take power and they take water in the SMR the small modular reactor is about this ability to create power on a small level its own generation. And I believe and I've talked about how they should give it back to the city and that's the incentive that that states should

8:19demand in order to bring in the data center. Is did this come because cities and towns have been pushing back against them? Did this come because it's the smarter play because the data center is a better investment overall. I didn't even know there would be an issue with the power going back to a city or a town. So what is the real impetus here for bringing this protection pledge about? You know I'm a conservative I'm not a populist but it was populism that caused this because Trump saw and and we've seen in the area that we live utility rates doubling that individuals utility bills are soaring and this isn't an attempt to address that problem because the utility company loves that there's a demand they love that there's a shortage this is this is how they make money the utility company is guaranteed a profit it's actually about nine and a half percent. So if they have an you know a hundred dollars of cost they're allowed to charge 109 well guess what they want more cost they want the cost to go up because if their cost go up

9:24to 200 they can then charge 218 that's doubling their profits so the local energy companies love this that's why blackrock is in this market now that's where the cattaris want to buy our energy and calpers they know that their demand is huge. So what did Trump do? Trump says no I'm going to try to prevent it. So let me say everything Trump did on this his promise in the state of the union trying to you know control what blackrock is doing the fix that he put in place yesterday these are phenomenal but he's going to have a problem the utilities are going to fight back and they're going to fight back hard because this was an executive order it wasn't a law and I can tell you blackrock spends a lot of money on congressman. Yes and and I don't say no to that but blackrock is going to lose when Bernie Sanders and Elizabeth Warren rally the democrats to be in favor of these kinds of things and that's the part that gives me a lot of pause in in that I I don't know if I want to be from a populist look telling people what they can or cannot make I do believe you could say

10:31certain nations can't be involved in businesses in the United States you can't own any utility you cannot own land in your military bases I wouldn't allow the communist Chinese to own anything in in the United States I believe that as a national security conversation can be engaged but if we're saying that this is populism and not conservatism I go back and look at this and say this is the kind of price fixing that an Elizabeth Warren and a Bernie Sanders are going to love don't ask me to love that it's it's not price fixing it's the opposite what trump is trying to do is stop the price fixing because right now the utility companies are allowed to fix prices they have a monopoly the only reason Bernie and and Warner on board here is because they just hate anything business so they hate blackrock they hate the utility companies I don't hate either one of them I can tell you I personally have investments through blackrock I'm not against blackrock what I am in favor of is more competition taking the handcuffs off the local data center and saying you can produce your own energy that's not government controlling prices that's more free market that's

11:36more capitalism huge fan let them produce their own energy stop these regulations that ban them from producing their own energy and that's what trump is doing I don't know that those two folks are going to be on board though remember it's trump's idea so if it's trump's idea they may be totally against it it'd be interesting to see them say we're opposed to lower energy rates when they complain about energy rates but if it is plays out as you're discussing it and it is a capitalist response they'll absolutely be opposed to it talking to dr. Matt will economist at the University of Indianapolis you brought up productivity a couple of times productivity is up you're a happy man oh my gosh this is where trump needs to go get a megaphone which I know he has plenty of those and she he should brag about this so it was up to point eight last quarter now you're thinking oh okay that's good that's not great that's despite the government shutdown this is a government shutdown impacted number and we always ignore the revisions let's not the third quarter revision productivity

12:39was up four five point two percent q two up four point two Tony I look back in history I couldn't find five point two increase percent in productivity going back 50 years the productivity is up because trump is hitting on all cylinders on deregulation on taxes on the one big beautiful bill he's doing everything again it's like this you know it's like this energy deal it's not hot and sexy it's not making headlines but man is it helping the economy and with that productivity you see manufacturing is up as well for the second month in a row wow okay you know me I've been talking everyone says oh doom and gloom dr. Well doom and gloom yeah because our manufacturing base has been shrinking since the liberation day in April not the last two months I'm so happy remember we talked about this last month is it a trend it's a trend we got two months and these are wasn't a small increase manufacturing in the United States expanded at a 4.8 percent rate last

13:43month wow this is good news so the manufacturing is back I was so nervous because we had a multi-year decline in manufacturing and now we're back good for the economy good for trump and the things he's done to help that happen and you don't think what we're engaged in right now in Iran takes away from that do you think these things can still climb even if it does take this five weeks plus that the president has indicated it will cause a decline no no not decline it's gonna cause a slow down think of it as a tap on the brakes instead of stopping the car it is definitely gonna be a tap on the brakes we're definitely gonna see some economic pullback from this but I don't think it's going to counterbalance all this positive energy that's happening dr. Matt well economists at the university of Indianapolis I appreciate you taking the time to be with us more to get to I'm Tony cats and this is Tony cats today the all new 2026 Toyota RAV4 is here building on everything drivers know and love about Toyota with a redesigned look and modern tech that makes life

14:47behind the wheel easier than ever the new RAV4 come standard as a hybrid providing smooth efficient performance for both city streets and longer journeys enjoy the legendary reliability Toyota is known for in the all new 2026 RAV4 learn and shop more at toyota.com toyota let's go places