Latinos In Real Estate Investing Podcast

The Google Lawsuit and the Current State of the US Economy Unveiled | Weekly Business Briefs w/ Martin Perdomo

September 13, 2023 Martin Perdomo "The Elite Strategist" Season 2 Episode 284
Latinos In Real Estate Investing Podcast
The Google Lawsuit and the Current State of the US Economy Unveiled | Weekly Business Briefs w/ Martin Perdomo
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Show Notes Transcript

Ever wondered how a tech titan like Google could possibly be on the wrong side of the law? Allow us to pull back the curtains and shed light on the gargantuan legal battle between Google and the US Department of Justice. We unravel the intricate details of this landmark antitrust lawsuit, where Google stands accused of unlawfully maintaining its search engine monopoly. We'll take you through the damning allegations, Google's staunch denial, and how they argue their agreements were nothing but fair play.

But wait, we're just getting started. Join us as we delve into the state of the US economy amidst rising inflation, featuring an insightful discussion on Janet Yellen's buoyant predictions. We also examine the potential domino effect of the UAW strike on Michigan's economy and the looming elections. And what about the ripple effect on car prices, supply, and demand? We have all this and more on this week's episode. So, get ready to immerse yourself in some deep, heavy-hitting business news. You don't want to miss it!

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Speaker 0:

It's Google vs the US Department of Justice. Treasury Secretary Janet Yellen says she's feeling very good that the economy won't enter a recession, as inflation recedes and the UAW strike could lead Michigan into a recession. These are the top three headlines in this week's weekly business briefs. First up Google vs the US Department of Justice may be the biggest antitrust trial in US history, according to Wion News. Starting Tuesday, september 9th, the tech giant will battle it out with the US governmental agencies in a blockbuster trial that alleges that Alphabet's Google's unlawfully abused its dominance in the search engine market to maintain its monopoly. The US and its state allies contend that Google has unfairly forged its position as the world's preeminent search engine. They alleged that Google's domination of online search is a result of exclusive contracts the tech titan signed with device makers, mobile operators and other companies. These contracts allegedly involved making Google the default search engine on most phones and web browsers. Filed in 2020, the lawsuit alleges that such contracts were intended to be exclusionary by Google and that they left rivals no chance to compete with the search engine, enabling its position as a search market king. It also alleges that such contracts have resulted in less choice for consumers and less innovation. This, in turn, helped Google parent firm Alphabet to be one of the richest companies on the planet Holy smokes. As per government estimates, google has grabbed 90% of the market share in search in recent years. Add, revenue from Google accounts for nearly 60% of income generated by Google parent Alphabet. Google denies these allegations and maintains that it did not violate the US antitrust law. In a court filing in January, google said its browser agreements were legitimate competition and not illicit exclusion. It also said these arguments did not prevent Google rival firms from developing their own search engines. Google said the contracts did not stop rival companies like Mozilla, apple, from promoting their search engines. Next up, secretary Janet Yellen feeling very good about the soft landing for the US economy. This is an interesting one. She is feeling optimistic. The US can fight off inflation without pushing the economy into a recession. That is a tall order. I am feeling very good about the prediction Yellen said on her way home from the G20 summit held in New Delhi. Bloomberg, I think you would have to say we are on the path that looks exactly like that. She is referring to hopes of soft landing. Every measure of inflation is on the road down, she added. Yellen has also been hopeful about the US economy, despite a chorus of bearish voices predicting a looming recession will soon hit the nation as higher interest rates squeeze businesses and consumers. The Federal Reserve has hiked interest rates from zero levels to upward of 5% to 5.5% in a bid to cool inflation. It succeeded in taming price pressures towards 2% target, with inflating slowing to around 3% in the recent months. Yellen grounded her last comments and data showing easing in the US labor market, which could relieve upward pressure on prices. Okay, so I got some thoughts on this here. So here's the challenge Interest rates are going up and we're gonna see real estate is gonna hurt. Real estate is. We're in the eye of the storm. We're gonna see real estate softening. We're seeing buyers leaving the market. We're in an affordability crisis. I've been talking about this now. I'm beating this drum now for over a year. We're in an affordability crisis where people cannot afford these payments at these prices with these interest rates. We have a four to eight billion dollar reset book of business on commercial loans. We're gonna see commercial loans start to blow up. We're gonna see some of these multifamily office spaces, commercial strip malls A lot of these things are going to start blowing up, as we got four to eight billion. Some reports say four billion, some say eight billion. Either way between four and eight billion dollars and mortgage reset loans is a lot of money and that will do a lot of damage to the economy when these guys and these companies try to go refi and they can no longer cash flow because the rents that they're collecting cannot cover the mortgage payments. At the current interest rates that we're in, that's gonna force the banks to have to renegotiate these loans and or sell them at a discount. There's going to be some issues. This is just a fundamental show. Ms Janet Yellen talking about this is a soft landing. I'm not sure I have a difference of opinion. We have the cost of money is going up, so businesses that need to borrow money to make their money and invest their money to continue to make money for payroll, for other things, for stock and other things in their businesses. They will suffer as the cost of money goes up. That squeezes the profit margins in the business and this is going to cost a challenge across the country as it pertains to with interest rates and recessions. Uaw strike could drive up inflation, push Michigan into a recession and even hurt Biden in this election. I'm gonna tell you this it ain't this that's gonna hurt Biden. What's gonna hurt Biden is him not helping Hawaii after the wildfires and yet he sent $6 billion on this week. He went to Congress to ask for $6 billion to keep funding the war on Ukraine and he is not sending money to our own people right here in our own countrymen. A strike by the United Auto Workers Union against four general, mortars and Stintalis, which could come as soon as Friday, could damage the economy and drive up inflation. The economic consulting firm Anderson Economic Group set in August a 10 day strike of over 143,000 workers could reduce the nation's gross domestic product by $5.6 billion AEG found, which could push Michigan into a recession. You think nearly one billion of this total would come directly from the company's losses, while another 859 million would be lost from workers pay AEG. Estimated the industry overall would lose over 3.5 billion AEG projected. The automotive industry makes up about 3% of the US GDP. That's a big number 3% of the US GDP, just the auto industry. So think about the impact that that will have, even on our GDP as a whole, if these auto maker workers go on strike. If the strike lasted only a few days, the three auto makers might not struggle too much, given all have inventories that could last about two months and much longer for some models. Dutch bank analysts wrote in a note that a strike could influence each auto makers earnings by 400 million to 500 million for each week of lost production. So let's talk about this. Let's unpack this a little bit Supplied demand, right? So let's just say that the auto workers go on strike for a couple months, two or three months, and now these guys have two months of inventory. They go through the inventory, they sell the inventory that they already have and now there's new demand for new cars. These guys come back to work in month three, or let's just say they come back to work in month one and a half, and now the man goes up. What do you think is gonna happen to car prices when there's less cars in the lots? Right? So inflation. Again, here's the big bad inflation. So now prices of cars are gonna go up because the demand, there's not enough lots in the car and demand is high and production is low, and then interest rates are high. So this is a crap show for the auto industry and it's really a crap show for Americans. The American people are the ones that wind up paying the price because prices are gonna go up, because these guys are gonna have to work more, longer hours, and it just becomes a crap show. Anyone from Michigan watching or listening that might be affected by this strike, hit me up. Share your experience. Let's discuss. Let me know what you think. Let me know your thoughts. Let me know if you think my logic is cool, not cool. Are you processing this any differently than I am? Is there any moves down the road that you see that I might not be seeing? Let's unpack that. Let me know what you think. And this has been your weekly business brief. I'll see you guys next week, peace.