EV sales slow, US Treasury yields grow, 'Niu Lai' has impressive box office mojo

0:00N.P.R.

0:06This is the Indicator for Planet Money. I'm your host, Adrian Ma. I'm your other host, Ricky Mulvey. And joining us from producer land is our third host, coolest cucumber, Mr. Cooper Katz McKim. Hello. Welcome to me. Thank you for having me. Time for Indicators of the Week. We're here to tell you about the most interesting numbers in the news this week. And on today's show, we've got the ups and downs of EV sales. A movie so terrible, it became a box office hit. And the U.S. Treasury bond. It's hovering a little high. That's after the break. This message comes from Mattress Firm. Different sleep preferences?

0:44Mattress Firm's sleep experts can match you with a Tempur-Pedic Split King sleep system. Visit Mattress Firm's best sale of the year and save up to$1 ,400. Restrictions apply. See store for details. This message comes from Dataiku. AI is everywhere, but companies struggle to prove results. For that, they need people, orchestration, and governance working as one. Dataiku is the platform for AI success, built to bring it all together. Visit D-A-T-A-I-K-U dot com slash NPR. Support for this podcast and the following message come from Vanguard. Every day, shareholders meet to discuss important matters about the companies you invest in.

1:28Now you can make your voice heard, too. Vanguard Investor Choice makes it easy to set your proxy voting preference for your eligible Vanguard index funds. Visit Vanguard.com slash Investor Choice to learn more. Vanguard investors own shares of their index funds, and those funds own shares of the companies they invest in. Vanguard Marketing Corporation Distributor. Cooper, Katz, with Kim. Start us off. Okay, so my indicator is 27%. That is how much electric vehicle sales have fallen in North America year over year since last July, which is interesting because electric vehicle sales pretty much everywhere else are very much up.

2:10The rest of the world has seen more than 10 % year over year growth. It's kind of nuts. This is happening at a time where gas is hovering near, what,$4 a gallon right now, Cooper? Yeah, I think everybody else... Understood the assignment. The U.S. is working on it. I like my large SUV. We all do. Europe is leading the way with new sales in part due to government support. Spain, for example, has its own incentive program, giving buyers up to more than$5 ,000 if they bought an EV. And I guess the lack of government support is contributing to decline sales here in the U.S. Right. So last September, Trump officially ended the federal EV purchase initiative.

2:50But guys, here is where it gets interesting because EV sales is just one part of the story that interested me. Since 2022, there's been a tsunami of investment into battery manufacturing in the U.S. And in part, that was to serve electric vehicles. So what's a factory to do without that demand? Got to go looking for a new customer if you can find one. Right. So Ford, GM, LG, all these battery making companies are turning their eye towards grid scale storage batteries. Those are the things that can hold on to power generated from wind, solar, or whatever it is for later. Exactly. So Ford had planned this massive facility to focus on EV batteries, but now the factory will be a hub for grid scale batteries.

3:33Its hope is to find a certain kind of customer. Can we guess who I am talking about? Data centers? Yes, you're right. Oh, okay. The ultimate customer of 2026. We've talked on the show about battery demand increasing with more solar and wind. And I mean, data centers are just going to create an insane level of new demand. So it sounds like these battery factories are going to be just fine. I think that's right. I reported this segment, by the way, for the Indicators Weekly newsletter. If you haven't signed up for that, it's at npr.org slash indicator newsletter, or you can find the link in the show notes.

4:04Okay. Ricky Mulvey. My indicator this week is 5.3%. That is the yield on a 30-year U.S. treasury bond. And that's the average return investors now want to lend the government their money. And that is the highest it's been in nearly two decades. I mean, this number is a big deal in the economic world. For sure. And for everyone else, consumer debt, federal government spending, corporate loans all get hit when the yield rises on government debt. For example, small changes in interest rates means tens or even hundreds of billions of dollars more in federal spending. All right. So why is the cost of U.S.

4:45federal government debt so high? It's sort of a storm of economic factors. Number one, it's our national debt. It just surpassed $40 trillion, too much money to even imagine. And some investors are looking at that level of government spending and saying, hmm, you seem a little more risky. Like, Cooper, I want to borrow $1 ,000 from you. What would you do if I had no other debt? And by the way, I have a money printer at home. I would say, here you go. Take it. Easy. Now I have a hundred grand in student loans. I have some credit card debt. The money printer, by the way, it's getting a little hotter.

5:23I like sending cash to a lot of other people. And recently I've had some expensive trips to the Middle East. They just, they kind of popped out out of nowhere. And I don't know, you know how budgets get wrecked on vacation. What would you do then? I would hesitate before, before lending you too much money. I'm a little more risky and that's exactly what's going on here. But there's a second factor. Also, data centers. Data centers everywhere. Everything is data centers. All comes back to AI. We spoke to Urien Timmer. He's the director of Global Macro at Fidelity Investments for our margin debt episode.

5:53And Urien pointed out this issue during our conversation about AI. The hyperscalers are borrowing so much money in the bond market that you could argue that the treasury market is getting crowded out. In other words, the big tech companies are issuing a lot of debt to build out data centers and buy chips. And, you know, the Treasury is having to compete for those investment dollars now. If I were an investing man, would I have better luck investing in something like Amazon or the U.S. government? And that's the big question. So right now, Amazon's 31-year bonds, they pay investors about a percentage point more than similar federal government debt.

6:32It's really close. And it's, do you want to trust the Fed's money printing machine or Amazon Prime spending? Maybe Amazon should just start issuing its own currency. That's not the worst idea. Don't give out free consulting advice. Amazon bucks. Yeah, and by the way, the Treasury just announced a huge bond buyback. This pumps money into the economy and is meant to lower interest rates. At least as we're recording this, market reaction is muted so far. Adrian Ma, what do you have for us? I have an indicator that comes from China, and it is about one of the biggest movies to hit the Chinese box office this summer.

7:06An animated coming-of-age film about a cow and a bird called Nyolai. And that roughly translates to something like, the cow arrives. Let's see, can I play you a clip of this right now? Mama!

7:27This is like 1990. Someone hastily put together an animation clip of like a bird. and a cow that has like disturbingly angular facial features. It feels like if like where the wild things are had a fever dream. It is a janky looking production. If you had to guess, how much do you think this cost to make? $5. I respect that. Some reports have suggested the budget could be somewhere around$200. like the equivalent of 200 US dollars. That's pretty low. Wow, good on them. That is serious budgeting right there. Cost efficient. Well, we haven't independently confirmed this number. And to be honest, I'm not sure I trust it because for one thing, that number supposedly doesn't even count their labor.

8:21And this film, according to the South China Morning Post, took about five years to make. It was entirely the work of a mother-son duo who used basic animation software. And they did all the jobs. They like wrote, directed and voice acted it. This is oddly heartwarming. Like, I love to hear this. A mother and son working together for five years and they've produced a unquestionable movie hit. Good on them. Their labor wasn't counted towards the overall dollar amount because it was a labor of love, Adrian. Nicely done. And when you said a hit, I mean, it's interesting how it all happened, because at first when this movie came out a couple of weeks ago, people just panned it.

9:02It was like not playing in many places, but the people who did see it went on social media and said, this film is terrible. It's so badly animated. The plot doesn't make sense. It looks terrible. But that's something happened, as it sometimes does on the Internet. People's hate turned into love. And then people started to love how bad this movie is. According to a Chinese movie tracking website, it's brought in about 29 million yuan in its first couple of weeks. which is about$4.2 million US. Pretty incredible return on investment if we don't count the labor dollars. Oh yeah. We were just talking about this earlier and our editor actually just compared this to Backrooms, which is like another indie movie that found mainstream success after going viral.

9:51And to be fair, I mean, it's a little different because Backrooms is actually like a critically acclaimed movie. It has like an 87 % on Rotten Tomatoes. And, you know, unclear whether Nyo Lai will see global success, but, you know, China's a big country. It's still early. So maybe in a few weeks, we'll be lining up to see a really janky, low-budget, heartwarming film about a young cow. I would go see it. Yeah, 100%. This episode was produced by Angel Carreras and engineered by An Lee Huang. It was fact-checked by Julia Ritchie. Cake & Cannon is the show's editor and the indicators of production of NPR.

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