Rare Earths, Real Problems: Why Your Next Car Will Cost More | Wall Street Wrap-Up

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2:53That's the power of us. Equal housing lender. Member FDIC. Trademark 2025 U.S. Bank. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab.

3:15Okay, money rehabbers, time for honesty hour. Last year on the show, I did weekly recaps of the top stories on Wall Street and how they affected you and your wallet. And that was the focus of my newsletter, The Money Minute. So I surveyed you, my dear newsletter readers, and I asked you whether or not you wanted these news stories at all or evergreen financial tips. And by the way, if you are not reading my newsletter, please check it out. I've linked it in the show notes. Anyway, in the survey, I found that you wanted more evergreen, always relevant money tips. So I stopped doing the news episodes of Money Rehab.

3:44But then I heard from some of you who really loved those episodes and you missed them when they went away. So my question is, should I bring them back? If you're a new listener, you might not have heard one of these episodes. So I am doing one today. Please let me know what you think. And if you're into these, slip into my DMs at Nicole Lapin and let me know that you want me to bring them back. So without further ado, here are the top stories on Wall Street right now and how they're affecting your wallet. If you're wondering why cars are getting more and more expensive, why crypto suddenly feels less like a scam and more like a strategy, and why the job market looks okay at glance but kind of weird under the hood, you're not alone.

4:25The economy has entered its everything's fine, probably, era. Today I'm breaking down three stories. A mineral you have never heard of but is about to hit your wallet. Why one digital asset is having an insane glow up. And a labor market that is working but only in certain places. Let's start with the car problem. Here is a story straight out of 2023 and 2020, and honestly, out of 2018 and 2010, too. The auto industry is having a supply chain problem yet again, but this time it's because of rare earth minerals. Calling them rare earth minerals always makes me laugh because it sounds like we're going to be talking about gemstones here, but these are not as nice to look at, but they are way more important.

5:08Rare earth minerals are 17 metallic elements, so you can find these on the bariotic table. Some of them you might have heard of already, like scandium or neodymium. Now, despite the name, these minerals aren't actually that rare. The problem is that they're not found in high concentrations, and separating them from the surrounding material requires all sorts of processing with toxic chemicals. The waste produced is often radioactive. It is always toxic, and it's not something that anyone wants nearby. Here's why we should care. These minerals are used in nearly every single piece of advanced technology you can possibly imagine.

5:47So lasers, fiber optics, batteries, even your microwave. There is over a pound of rare earths in every electric car and about half a pound in gas-powered ones. So here's where we come in. China currently mines about 70 % of the global supply of rare earth minerals. In 2024, in response to the Biden administration trying to limit the Chinese computer chip industry, China banned the export of three types of rare earth minerals used to make computer chips, cars and batteries. In April of this year, Chinese officials expanded the restrictions to cover seven more rare earth minerals as well as Chinese manufactured magnets made from them.

6:24Reuters reports that car companies are in a full panic mode. The New York Times added that this isn't just about cars. It is threatening defense systems, too. But let's say it is just for cars right now. If automakers can't get that pound or so of rare earth minerals that they need for every single car, they cannot make cars full stop. And if they cannot make the cars, prices will go up. It is just supply and demand. So this current moment is starting to look a lot like the chip shortage of 2021 to 2023 when used car prices soared and people were making money just turning in their leases early.

6:59This means if you're planning to buy or lease a car this year, you'll probably be paying more and you might have fewer models to choose from. Think 2021 flashbacks, but with higher interest rates. So how do we fix this? Well, honestly, we don't have a good solution. The auto industry has had an inkling that this was coming since 2010 when China cut exports to Japan. And so they've had over a decade to try and solve this problem. And they have come up pretty empty handed. Companies have tried to develop alternatives to rare earth minerals but have not succeeded yet. Mining more rare earths in the United States sounds like a great solution, right?

7:35But remember the toxic waste problem. Nobody wants that stuff in their zip code. So really what happens next depends on global politics. And the best case scenario is China and the U.S. coming to a good trade agreement once and for all. But for most of us, the short version is expect car prices to climb and tech prices to follow. While minerals have been getting harder and harder to find, another digital asset, digital gold, has been everywhere. Bitcoin ETFs have attracted over$5.5 billion in new investments in May alone. That demand helped push Bitcoin to a new all-time high of over$110 ,000 per coin.

8:13And we saw money flow out of traditional equity funds and even gold. Yes, gold funds lost$578 million in May, while Bitcoin funds soared. So what the heck is going on with crypto? Well, part of the surge has been made possible by the creation of the Bitcoin ETF itself. In the OG days of Bitcoin, it was kind of hard to buy. Even creating a digital wallet was too high of a threshold for some people. So for some time, the easiest way was to invest by buying shares of MicroStrategy. That's a tech company that holds about 2 % of the world's Bitcoin. And then in January of 2024, the SEC approved spot Bitcoin ETFs.

8:50And that was a game changer. A Bitcoin ETF or exchange traded fund basically lets you invest in Bitcoin without actually buying or storing the crypto yourself. You can buy it just like you can a stock in your regular brokerage account. No crypto wallet, no private keys, no sketchy crypto exchanges needed. That accessibility and regulatory stamp of approval brought in a wave of new investors, retirement funds, institutional investors, and honestly, everyday folks who had just been waiting for a safe way to buy it. So why is looking at Bitcoin relative to gold and equity funds newsworthy? If you've invested in a diversified portfolio, this shift matters.

9:29Fund managers rebalancing toward crypto can change the performance of stocks or sectors you're already in, especially tech, which tends to ride the crypto roller coaster. And when people start treating crypto like a safe bet, it usually means the world is feeling pretty unsafe. But that brings me to the third story. Is the economy really that bad right now? When the May jobs report came out, it showed 139 ,000 new jobs and an unemployment rate of 4.2%. So in plain English, those are good numbers. But here's the catch. Most of those new jobs came from health care and hospitality. Health care and social assistance added 78 ,000 jobs.

10:07Leisure and hospitality added 48 ,000. That means almost every other sector stayed flat or shrank. Manufacturing, for example, lost 8 ,000 jobs. That's really important if you're thinking about switching careers or asking for a raise or if you're still on recession watch. In industries outside of care and hospitality, it's getting more competitive, not easier. And now layoffs are starting to spread. Walmart, Amazon, Microsoft, Procter & Gamble have all announced cuts. Citi is pulling back its China operations. CrowdStrike is replacing 5 % of its workforce with AI. Disney and Warner Brothers Discovery are also making cuts.

10:45Disney says it's for efficiency, and Warner says it's part of a larger restructuring. So the job market is still creating opportunities, but only in narrow slices. If you're outside of these growth areas, please build a cash cushion just in case, and don't wait to job hunt until layoffs hit your team. I do not want to scare you, but it is always better to be safe than sorry, especially when it comes to your money. Okay, so those are the three stories that are major on Wall Street right now. You might be asking yourself, Laban, what about all the Elon Trump stuff? Don't worry. In tomorrow's episode, I'm joined by Dan Nathan, the principal of Risk Reversal Advisors, who you've seen a ton on CNBC.

11:25In that episode, we're going to talk about the Trump-Musk fallout, how it's affecting Musk's companies, the taco trade, and what Dan is bullish on right now. But until then, here's today's tip you can take straight to the bank. If you're car shopping, start tracking dealer inventory now. Now, when supply shrinks, prices spike. So get ahead of the curve by setting alerts on aggregator sites for models that you want. You will spot price hikes early and maybe even snag a deal before the panic hits.

11:54Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Lavoie. Our researcher is Emily Holmes. Do you need some Money Rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at moneynews and TikTok at moneynewsnetwork for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.

12:37Thank you.

13:10Thank you.