**Welcome to A Scrap Life Podcast**

**Host: Brett Ehart**

Welcome to A Scrap Life, a podcast solely focused on the hustlers, grinders, operators, and business owners who live and breathe the scrap metal industry every day. I’m your host, Brett Ehart.

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**Brett Ehart**: Okay, welcome, everybody. We’re here for the trade. It’s our new podcast room. We’re getting it dialed in over here, and I’ve got Chad and Brent with me. Hopefully, we’ll hear what the iron’s doing. Welcome, everybody. I want to hear what America’s doing. We know iron’s price is going to go up now with all this infrastructure. I mean, we’re going to get some big-time inflation, according to the smart people at MSNBC. So, the world’s coming to an end, but we’ll see. What do you think, Chad?

**Chad**: Happy America, 7th of July. Let’s get this.

**Brett Ehart**: Happy post-July 4th. We’re recording this on Monday. So, the Ferris markets, I mean, I feel like are fairly boring this month. You know, pretty lot of steadiness out there. But I think overall, we got to talk about this because there is something that happened over this past week, and obviously, the market has pretty much fully recovered. So this chart we’re looking at, the Dow Jones Industrial Average, really shows we’re at all-time highs, mid-January, late January.

We came down pretty significantly, bottomed in April right when the tariffs were announced, and now we’re damn near back at all-time highs again.

**Chad**: I like it. That should bode well for the Ferris trade moving forward at some point. I would think if they can get, so what you’re referring to, on July 4th, Trump signed the BBB, right? The Big Beautiful Bill. Yeah. And inside that has a ton of implications for business infrastructure, tax ramifications. And I think from my perspective, it does bode really well for the future of Ferris scrap, which is obviously the topic of today’s podcast.

**Brent**: Yeah, to your point, we’re looking at a chart of consumer confidence. We jumped from, you know, 52 to 60 in the last couple of months. So, this tells me you’re not the only one feeling better about things. What about you, Nick? How are you feeling?

**Nick**: Well, I mean, I think it should do a lot better for our markets, the bill. I mean, I don’t know all the little details about the bill. I’m optimistic that it’s going to help our markets. I think the chart you’re showing now is possibly the most important chart to me because it feels like everyone’s been on their heels for so long with some big demo projects and some other big manufacturers not really building. A lot of orders aren’t getting pushed through because everyone just doesn’t know what’s going to happen.

So, if people are more confident in the economy, it should do good for us local here at our scrapyards.

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**Brett Ehart**: Yeah, I think another component of consumer confidence, to me, what’s hinging on a lot of this is inflation data. Meaning are tariffs going to cause inflation or not? Is inflation really slowing? Let’s talk about the world central banks and DJT’s little tweet to Powell about where he thinks we should be.

We’re looking at Trump’s tweet, which says world central banks and has all the bank rates. You know, we’re pretty high on the list of what our interest rates are currently at. And then he says, hey, we should be here somewhere around between a half and 1.75%. So, let’s say 1% to 1.5%.

Brett, what are your thoughts on where we should be at rates wise, and what do you think inflation’s going to do?

**Brett Ehart**: You know, I’m as I think you turned me on to it probably a year or two ago, the All-In podcast, and I think they really dive into the rates and this topic. So if you listen to it, it’s worth a listen just for a multitude of reasons, but they discuss this. I tend to believe, I think it’s with Chamath when he talks about the rates should be somewhere around that 1%. Just from a savings and interest rate savings alone on our own debt, it’s significant, right?

But then if you add the ability to finance whether it’s equipment or buildings, speaking from our perspective, I think that helps the automotive sector. It helps the housing sector. It helps so many components of our country. It does seem kind of wild that we are sitting today at 4.5%.

And we could be sitting, you know, a full percentage or two, you know, you’re talking 100 or 200 basis points lower. I mean, you combine that with these tariff revenue that’s coming in and the tax benefits that are now going to beholden on businesses investing in infrastructure, investing in equipment, investing in made in America. I mean, this thing is ripe to explode to the upside if you can take down the rates even one percentage point makes a humongous difference right So one and a half to two. I mean you I think you light the whole thing on fire in a good way.

**Brent**: When the rates started getting hiked up. Maybe you two can help make it make sense to me. I asked our CFO Brian like why would they jump these rates? He explained it to me. You know, but it still didn’t make sense like what is the point of making our rates that much higher? You know, when it was what six or seven not that long ago. You know, and like what’s the point of changing the rates to do that when I think it does bode a lot better for businesses and just individuals trying to buy a house when the rates are lower. Like what is the reason behind it?

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**Chad**: So from my perspective, this chart which actually on the other side shows the inflation data. The world central bank’s job really is to have 2% inflation every year. That was their goal. Some guy from Switzerland or the Netherlands came up with it like in the 70s. For whatever reason, that’s what they’ve targeted. When you have inflation, it really hurts an economy because it hurts the average worker. It has a lot of negative effects.

During COVID, we saw Trump print a lot of money, then Biden printed just as much even after we were resolved with COVID, leading to massive inflation. The world central banks to combat that, they wanted to slow things down when things were really hot in 2021-22. So they increased the rates to have less spending to try to slow inflation back where it needs to be.

**Brent**: So the point of it is just to slow it down because there’s too much, you know, money that got printed so quickly.

**Chad**: Yep. When your inflation data…you got to think like what’s interesting…so I’m in my mid-30s. My business career has experienced Amazon, which caused some deflation. Think of Kmart going out of business because Amazon offered the same products but cheaper. We experienced limited inflation from around 2013 to 2017. Suddenly, after COVID, our dollar weakened by 15% since the beginning of the year.

Our dollar is weak against those where inflation feels significant. Brett, you’ve always said, “I just want to own as many assets as I can at this stage of my business career.” And I think that’s going to be a really smart strategy because our current secretary is saying, “I want 3% inflation.” So that means money is growing at 3%, which the way they measure it, 3% could really be like five or six. So your assets are going to grow pretty steadily here. As a business owner, especially if I’m to own a scrapyard, I’d really be thinking about the increasing costs.

It’s worth mentioning that the big argument with Trump was that Jerome Powell was slow to raise interest rates after all the money got printed, and now he’s slow to lower them despite upcoming data.

**Brent**: And from what I understand, Powell said, well, you threw this tariff curveball in, impacting inflation as economists believed tariffs would create inflation. When that didn’t happen, the countries absorbed the tariffs, and consumers didn’t feel the brunt.

**Chad**: Exactly, and so you have inflation sitting at two and something when ideally we want like 3% inflation, 3% GDP growth, and match it with something like 3% interest rates or something like that.

**Brent**: Yep, they feel confident in achieving economic growth, and with tariffs, they can get the debt to GDP ratio to an ideal level. That’s why interest rates can stimulate growth in our economy. I’m saying, do projects now because it might get expensive due to demand, labor shortages, and increased costs. When everyone starts building simultaneously, it could be like the previous financial crisis where resources were scarce. It’s crucial to build strategically.

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**Brett Ehart**: We've concluded our session on the BBB and US economy. Further stimulation is anticipated globally. China has hinted at supporting real estate financing, affecting building and construction materials, including rebar and steel. The iron ore market suggests China’s economy may receive government intervention.

**Chad**: Helicopter money has been anticipated, especially if challenges persist. When it arrives, it often comes in substantial waves.

**Brent**: Speaking of market realities, how about we discuss pig iron? The pig iron chart indicates a fall, which reflects scrap market nuances. Global adjustments might be slower in our domestic settings.

**Brett Ehart**: Absolutely. The demand from Cleveland Cliffs and adjustments in steel mill operations reflect broader market trends. Engagement in projects and planning for infrastructure will set us on the right path for growth.

**Nick**: There’s been genuine confidence and a positive outlook regarding aluminum prices driven by market factors. We’re adjusting prices and strategies accordingly.

**Brent**: It indeed reflects market optimism and we anticipate forthcoming opportunities in aluminum and related sectors.

**Chad**: Ending with turkeys heavy melt pricing, it’s been flat, but given how quickly scrap trades, it suggests readiness for better conditions.

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**Brett Ehart**: I think we're poised for good times ahead. Stategically, securing tons and anticipating future growth, we assure better days are coming. We all stand to benefit from industry’s upswing.

**Nick**: That’s right. Stability now means opportunity soon. We’re preparing for growth aligned with market conditions and upcoming projects.

**Brett Ehart**: All right, has been a rich discussion. We’re refining our podcast room and our approach, tailoring podcasts to small and medium-sized businesses. Stay tuned for insightful content. Take care, everyone. Thank you, everybody.