Wall Street Week | Michigan Manufacturing, AI Debt Investments, Baby Bonds, Canadian Coal Fight

David Westin: This is "Wall Street Week." I'm David Westin bringing you stories of capitalism. As AI lending sets new records where is all that capital coming from and can it keep up the pace? Plus, the power of saving put together with the power of compounding. Trump Accounts hold the promise of building capital for the youngest among us. And it turns out that it's not just the federal government getting into the game. And everything old is new again. Alberta, Canada shut down its coal mines in the 1980s. But now it's moving to reopen them. And U.S. trade policy is partly responsible. But we start with a new effort to support the growth of advanced manufacturing here in the United States as Ford, JPMorgan, and the state of Michigan announce a launch pad to match buyers with financing with suppliers in a part of the U.S. economy that's fallen behind. We sat down with JPMorgan CEO Jamie Dimon, Michigan Governor Gretchen Whitmer, and Ford CEO Jim Farley as they gathered in Detroit to lay out their plan. -We're trying to fix a problem onshoring things that were offshored in the name of pennies on the dollar to make here in the U.S. where we need it to be independent, even defend ourselves. Ford's going to commit a billion dollars of purchasing for new companies that are going to be building advanced manufacturing, new capabilities, even magnets and rare earths, that we used to buy overseas. And now we're going to buy here with the help of JPMorgan as well as the state of Michigan. Westin: It's Michigan LIFT. Do they have to be Michigan companies? -Yes. Westin: So companies from Michigan. So, Jamie, I ask you, markets we rely upon for an awful lot, basically, it's served us in good stead for a lot of years in the United States. Why don't markets already take care of this? Why do we need this initiative? -Yeah. So I think first I applaud the initiative. And I also think it's really important that states, government, business work together to fix things like Detroit, which they did. So that's the number one thing. But we need... We lost some of the muscle to do that. So I think markets will take care of a lot of it. But if you're an innovative company and you invented something here, you need an order. He's got to order it. It's got to actually work. They may have to build a real plant, not just an experimental plant. And so it takes that whole group of us to do this kind of thing. So, and hopefully, this will be replicated. This needs to be done everywhere in a lot of industries to make sure the United States can defend itself. Westin: So, Governor Whitmer, why Michigan? Why is it so important for Michigan? Why is this the right place to start this? -Well, we know how to build things. Michigan, that's who we are in our DNA. We were, you know, the arsenal of democracy. This is about homeland security. It's about advanced manufacturing. That's who we are in Michigan. And so when I saw JPMorgan was doing this resiliency initiative, I reached out and said, "Let's talk about what's possible here in Michigan" because I know what we are capable of. And I think government plays an important role with industry as we think about what the future looks like and how do we do advanced manufacturing and protect ourselves. And I think this is a combination of all of those great strengths. But we need to really have a concerted collaborative effort here. Westin: This is, ultimately, about supply chain, as I understand, a resiliency of supply chain, which has been disrupted by geopolitics, actually, by trade, and things like that. How does this fit for example, Governor Whitmer, with your near neighbor Canada? As we know, there's a lot of back and forth in the auto industry for Canada. How does this initiative fit with that? -Well, I want to first and foremost say the Canadians have been tremendous allies and partners of ours here in Michigan for a long time. Autos go back and forth over that border. This is the busiest crossing in North America, is right here in Detroit. And so we're proud of that long heritage. But I think it's really important that we continue to onshore as much as we can to the United States from all around the world. Westin: But if a Canadian company came along and was innovative in the industrial space and had something for example, Jim, that you could use, could they apply to this program? -Yes. But we really-- We really want this to be a Michigan initiative. But there are so many things in Canada that we depend on, the whole aluminum. All of our trucks are made out of aluminum. All the ingots come from Canada across the border. We do all the finishing of aluminum here going to all of our trucks and all of our plants. And so we are looking for innovative companies even in the aluminum supply chain with this initiative. Westin: So, Jamie, you are the anchor capital provider to this. And that's, obviously, very helpful to either startups or, as I understand it, small companies. It's not just for startups that this program is designed. They're facing a lot of other issues too including higher interest costs right now, which really hits the small and medium sized businesses disproportionately in the market. How does this fit with the pressures being put on some of these very companies right now as you see, bond yields rise, interest rates rise? -I think you have to separate this. We should be doing this regardless of bond yields and things like that. And that may make it harder for some people. But, you know, to me, the ultimate goal is to get inflation down. And so sometimes you have to have a little bit of pain in the short run to accomplish what you need in the long run. But this effort transcends what the market does today and it transcends what the yield curve does today. We need to be doing this for the future safety of the United States of America. Westin: This is part of a larger initiative you announced a while ago. The Security and Resiliency Initiative, basically, $1.5 trillion. This is part of that. Where does that stand? And, by the way, insofar as this goes beyond the state of Michigan, which is, I understand, you'd like other people to copy you and what you're doing. Are you willing to be an anchor capital provider in other places as well? -Totally. So that initiative is real. I mean, we went through what we really need in drones and nuclear and rare earths and semiconductors. And we have a lot of people, a lot of policy around what we need to do to make it work. It's coming up to one-year anniversary. So we'll be announcing the numbers will be better, in my view, than $1.5 trillion. We've also invested $5 billion directly into companies that do security resiliency not venture but pre being a public company type of thing. And it is working. This thing is just-- if it works, you do--just do more of it. It just should be replicated. Westin: If you go back to the 20s and the 30s, I mean, it really was the engine behind a lot of the U.S. economy. And we're not going to go back to that. We have to go forward to the future. But can Michigan regain some of that prominence? -Absolutely. I think investments like this showcase what we are capable of and uplift. You know, I've mentioned our workforce, but I wanted to make sure to also include we've got the highest concentration of engineers per capita in the country as well here in Michigan. We've got, I think, the talent to tackle the world's problems and to do it here. We just need the organization and the ability to make all of the connections for innovators who are, I think, resolving or coming up with the solutions to problems that we're all confronting. Westin: Jim, in your auto business as I noticed there are a few competitors around the world particularly like in China. And you've talked before about the ability of the Chinese manufacturers automakers to move at light speed. -Yes. Westin: And that we need to speed things up. How do you fit together moving at light speed on the one hand with a program to bring in new companies whether they're startups or they're small companies expand. That sounds like that takes time. Can you move at light speed with that level of innovation? -Sure. I don't think we have a choice. You know, it's very humbling to see the competitiveness now around the globe especially in China. But I have to say, I'm very optimistic. We developed a small group here in the U.S. in California. They out-innovated I think companies like the, you know, the really good EV companies in China. We're coming out with a $30,000 vehicle built in Louisville, Kentucky, engineered in California, Michigan. And I think it'll be fully competitive with BYD if they were, you know, in Mexico. So we have to have innovation. But we also have to have these kind of programs and we have to onshore things that we've offshored. Like Jamie said, if we don't do all of that, you know, we're going to be in trouble. But there's an opportunity here that I don't think everyone sees yet that we see at Ford, which is, you know, Ford being a winning global company in this new competitive landscape. But we have to do it all. -Can I just mention one quick thing about Michigan? There are, and don't ask me which states, but there are some states that are doing a pretty good job at driving out small companies, venture capital, innovation and manufacturing. This state wants it. And that is half the game. Westin: Which points to... -I'm not going to mention which states because... Westin: Come on. You can tell us now. Nobody's listening. You can tell us. We'll just keep it among us. But it does point in a direction as we compete on the world stage with China and with everybody else, what advantage can we get from our capital markets, our ability to fund these things? I mean, compared certainly China, but compared to Europe that's mentioned in your piece. -I think the American public doesn't understand the power of our capital markets. So we know it was venture capital and the mosaic, private equity, small companies, middle market companies, large companies. But you can raise tons of capital in debt markets and preferred markets. There's a lot of research around it. So America's capital markets have been growing, growing the size of companies for decades. If you go to certain parts of the world like you know it's unfortunate, but Europe is stagnated. They have great companies. I'm not insulting them, but they haven't kept up. They don't have as much R&D as much venture capital as much equity risk taping. They don't have our vibrant equity markets and debt markets, which I want them to have. I want them to fix that. And they'll be good for them. But, actually, ultimately be good for us too because the stronger they are the more business you and the more they can defend themselves and pay for what they need for security resiliency. So it is a huge deal. And you go to large parts of the world, they simply don't have it. It doesn't exist. Westin: We can't have a conversation these days without talking about AI at some point, right? And when you talk about capital availability, is there, Jamie, do you see any evidence of crowding out because there's so much demand for capital to go into AI right now. -You know, I mean, the crowding out is coming from the government. So governments around the world are borrowing record sums of money, which is inflationary, by the way, including our government, which is huge. And, but no, I mean, if people are raising productive capital because they think it's going to pay out in all various ways, I think that's a good thing. It doesn't mean it's all going to pay. It doesn't mean you have to pay more for the capital, but, generally, for productive future growth. Westin: So, Governor, it's your state, you should get the last word. Tell us about AI and Michigan, how it fits potentially into this new initiative? -Well, as we think about the initiative, it's about connecting the innovators with the capital and with the customers. And that's really the role of state government in this, you know, in the Michigan LIFT. We're all navigating a world that is changing fast. And that's why I think collaborations like this are going to be important. We've got to be as nimble as we can. That's not generally what government is known for. But I think that when we tackle problems like this, whether it is something on the horizon or something we're dealing with that's changing every single day that increases our odds of success. Westin: Coming up the amazing story of what seems to be unlimited AI investment and an unlimited appetite to fund it through historic levels of borrowing. Is there any end in sight? Westin: This is a story about trees growing to the sky. They say it doesn't happen. But looking at the investment in AI, you have to wonder whether this just might be the exception. It's already historic and looks only to keep growing. But where is all that money coming from? And can it pay off for investors? -I see through 2027, at least, one trillion dollars. In fact, we are going to be short. I am certain computing demand will be much higher than that. Westin: By now, we all know that AI has an insatiable appetite for compute. And that means more data centers, chips, and other expensive infrastructure. Equity investors have already benefited seeing shares of the 6 hyperscalers rise by an average of 15% year to date. Now it's the debt investors turn. -So the numbers keep growing. And I think that's the challenging piece of it. Westin: Debt investors like Loren Moran, a fixed income portfolio manager at Wellington Management. -When we look back to 2025, we're really-- this borrowing from hyperscalers had really only begun. Through the course of 2026 we're probably looking at around 300 billion in the investment grade market borrowings from hyperscalers themselves. Westin: By some estimates, the tech sector accounted for just 5% of investment grade corporate bond issuance in 2024. That number is now close to 20%. -When we think about, over the course of this year, likely we'll see $2.25 trillion of total issuance in the U.S. investment grade market. So it's a pretty substantial portion of the debt that we're seeing in the market. And, importantly, when we think about the actual growth in our debt markets is largely coming from the hyperscalers at this point. And we look at year over year investment grade issuance being up around 35%. Westin: So far what's the appetite for all this debt? And to make it a little simpler, let's start with investment grade for the hyperscalers. So there's other financing, but just start with that. It seems like there's a fair appetite for that debt. -Yeah, it certainly started off with a huge amount of appetite. These were new issuers. They were double-A rated balance sheets. People were very excited to be able to actually buy this debt in the market. I'd say every subsequent deal in every global market that's starting to shift. Buyers are demanding more compensation to lend to these issuers as they're a growing footprint in our markets. The other component is, there's just an overall demand for capital from sovereign balance sheets globally as well. Also a fair amount of M&A activity too. And so we're just seeing a little bit of stress in terms of just the sheer size in demand for capital globally. That's causing more indigestion. -They have had, I don't want to say infinite capacity, but more than enough capacity to do what they need. The real question will be, as we get into next year, does that sustain? Westin: Scott Schulte is the global co-head of investment grade debt syndicate at Barclays. I wonder about how you analyze the risk associated with AI debt. And one of them is what you just suggested. Is there a concentration risk, apart from the index in terms of the equities, just in terms of the debt? Is there a concentration risk when you get that much debt against that particular application? -Right now the big 5 hyperscalers are about 5% of the index. But again go back two or 3 years, that was one to two percent. So that concentration has jumped up meaningfully. Now there's still 95% of the index of other things. But they are now actually becoming some of the leading components. And so whereas banks used to be the top of the index, JP Morgan, Bank of America, because, obviously, perpetual funding needs, they tend to issue much shorter debt. Hyperscalers prefer much longer debt because it fits the business model much better. And so, as you think about what we call the duration of the index, it's extending meaningfully because they issue 20, 30, 40, 100-year debt in some instances. Westin: Moran says we've seen the risks of concentration before. -Hearkening back to, you know, when we think about post GFC and thinking about money center bank concentration, which typically has been the largest source of concentration risk in the market that we've dealt with, the AI hyperscaler trade will easily overtake the U.S. money center banks in terms of concentration over the course of the next year and a half, or two years. Westin: Hyperscalers are flooding debt markets with more than just traditional corporate bonds. Special purpose vehicles allow them to issue bonds specifically for data centers, keeping the debt off their balance sheets. -The investment grade markets, as I mentioned, are actually being asked to bear a lot of different types of risk than we do traditionally. So the hyperscalers may actually get to a point where they're very attractive incremental bond market opportunities whereas data centers are a little bit different. And I think the nuance there is data center financing bears much different risk profiles than we typically have in the investment grade market. You have construction risk. You have permitting risk. You have electrification risk. And so this, ultimately, is being born by a market that this is very new to. -I think where you're seeing more differentiation is in some of the off-balance sheet structures whether it's the GPU financings, the chip financings, the actual data centers themselves. You've seen in recent days there's been force majeure at least implied in a couple instances. And so you have to start thinking about the AI ecosystem holistically and tangentially what impacts it. Meaning can I get the power? Can I get the transmission? Can I get the heating and cooling? Can I get the thing built in two years, when it's supposed to be built? And if it's not, what are the outs that the hyperscaler might have in terms of the contractual agreement on that data center? Westin: It's the hyperscalers issuing much of the debt, but not all hyperscalers are created equal as they go into fixed income markets. -You see actually a fair amount of dispersion within the sector both in terms of absolute levels, but also in terms of how the market treats their credit curves as well. I'd say a big piece of that has actually been governance clarity around financial policy and otherwise. You know, what credit investors typically want is certainty of cash flows, very clear expectations around financial policy prudence. And that is more challenging. This is a sector that, historically, has not had a lot of debt. But we are seeing the market differentiate between more levered balance sheets, highly levered balance sheets, like an Oracle versus less levered balance sheets like a Microsoft. And so it is not all one trade. But you do have an underlying theme that they tend to move with some correlation to one another, but with slightly different betas. Westin: Subadra Rajappa is the head of Americas research at Societe Generale. And though she sees investors paying attention to the health of borrowers balance sheets, she says there's still a market for riskier hyperscaler debt if the price is right. -There are some names that are trading at a significant discount. The markets are getting more and more sensitive. I mean, just in the last couple of weeks, we've seen a significant amount of widening in some of the high yield names. So the investors are getting more and more discerning. The general level of yields have gone up quite substantially. And corporate bond spreads are still relatively healthy. So for the investor, it's a question of all-in yield. And the all-in yield is still quite attractive in some of these names. Westin: But with so much debt being taken up with AI, what does that leave for the rest? Those needing capital for things other than AI infrastructure, especially, when yields overall have been steadily rising for all borrowers. Well, talking about those spreads or those yields, is there a noticeable difference between, on the one hand, AI borrowing and other corporate investment grade? -AI borrowing is quite a lot. It might be crowding on some of the other investors who are coming into the market. But it really depends on what type of investor you're talking about. Some of the corporates that are trying to come to the market can wait for a little bit longer an issue next year. They're trying to evaluate the general level of yields right now and figure out if the opportunities are right for them. But, you know, the hyperscalers have their mandate. They're going to be issuing a lot this year. More to come next year. And they're a little bit, you know, I would say, time agnostic, if you will. Westin: There are risks associated with AI, execution risk of a variety of sorts whether it's power or it's resistance, community resistance, also concentration risk because there's just so much of it. Is that being reflected in the bond market so far for AI? That's a very good question, David, because I think that it's really hard to see that in the data as of yet. Like I just mentioned, I mean, some of the high yield names are starting to come under pressure. You are seeing investors being a little bit more discerning about where they put their money to work. But as of now I think that the supply is being very well absorbed. Westin: It's not just AI debt that looks like it's growing to the sky. AI companies are right alongside other corporate borrowers in competing with sovereign issuers as governments around the world contend with debt burdens that just keep growing higher with the inevitable move to higher yields. -So the broader dynamic is at play here for me still, even though we're talking about hyperscalers and the issuance that's coming out of the corporate bond sector, is the magnitude of the debt and deficits in developed markets. So this is not just a U.S. phenomena. You're seeing a lot more of that happening globally whether it be Japan or the U.K. More issuance coming from the likes of Germany for defense spending or infrastructure as well as some of the spreads that we've seen in countries like France that are starting to widen out. So government bond debt, in general, you know, for the longest time, has been a source of demand for investors. And now you're seeing this competition for capital, if you will. So investors now have the option of either investing in government bonds or corporate bonds at higher yields. But, broadly speaking, my perspective is that government bonds are starting to crowd out the larger, you know, bond market complex. Westin: Investors haven't found the ceiling for the debt binge yet. But unless these trees truly do grow to the sky, there is a ceiling up there somewhere. And when we reach it, the consequences may extend well beyond the bond market. -I think that my concern, broadly speaking, is all the issues that you just raised with what happens to this investment. How does that, you know, do these larger companies recoup some of their capex that they're spending in AI for not just this year, but for the next several years? And, you know, there's also, as we head into the midterms, I'm a little bit concerned about, you know, what the pushback might be for data center development. Would that slow down the progress on AI? Westin: Up next, we all know about the enormous difference between those who have capital and those who don't. Now governments are getting into the business of helping seed savings accounts for children at birth. We go through how it is supposed to work. Westin: This is a story about the miracle of compounding. As Benjamin Franklin's popular saying goes, "a penny saved is a penny earned." And Einstein added to it that compounding is the most powerful force in the universe. But for that force to work there have to be those pennies saved. And, unfortunately, today Americans are saving less and borrowing more. Now governments are stepping in to jumpstart savings programs starting as soon as children are born. Our colleague Scarlet Fu brings the story from inside America's wallets on the growing options to save more and smarter. -I think I got 3 new puzzles today. -When Wendy Robinson's children were born, she was in her 30s, still paying off her student loans and juggling the many costs of being a young parent. -For a good chunk of when my kids were little, our costs for child care were more expensive than our costs for our mortgage. -Then came the 2008 financial crisis, a shock that left Robinson and many more Americans deeply in debt. -Our family had the misfortune to buy a house in Arizona in 2006, which turns out to be about the worst time to have ever bought a house. -When Robinson finally began putting money aside for her son's educational savings fund, she knew she was running out of time. -It was just realizing, "Oh, we've only got like 6 years," because my son was already in middle school by that point. -This summer the Trump administration launched a new savings program that might have helped parents like Robinson, letting families and friends put money into a fund for babies from the day they are born with a 1000 dollar gift from the government to get them started. It's an idea that National Economic Council director Kevin Hassett has been interested in since the 1990s. -Very very few Americans have benefited from the massive compounding from equity markets and other forms of capital investment. But we need to have an account so that when a kid's born, they can sort of see that they're part of the American dream too. And the compounding can help make their life better. -Today Hassett's idea is realized in the form of Trump Accounts. The latest offering in a patchwork of federal savings accounts available to families, each with its own rules and tax treatments. -So I think the best way to explain a Trump Account is that it's an early way to save for retirement. -Tricia Scarlata is head of education savings at JPMorgan, where she manages strategy for the 529 college savings plan. -So I think with Trump Accounts that's even encouraging families even at a younger age to start thinking about their child's financial future. And I think the ultimate goal in everything that we do, you know, is to try to prepare people as early as possible, so that we eliminate this long term debt. Student loan debt today is at $1.65 trillion. Credit card debt is $1.2 trillion. It's a real problem. -Saving those pennies early and letting compound interest grow is a good start, particularly with a seed grant from the government. But the net results available to the child later in life also matter especially when you factor in taxes. Both 529s and Roth IRAs have their advantages come tax season because qualified withdrawals including all investment gains come out completely tax free. Trump Accounts will work differently with earnings taxes ordinary income when the child is qualified to start withdrawing the money at 18. That means families don't get the same tax-free growth as a 529 and Roth IRA. Adam Michel studies tax policy at the Cato Institute and he says that could be a problem. -The Trump Account is this account that's put on top of the existing savings ecosystem. But it isn't a simplification. They have their sort of seed history in universal savings accounts. This idea that we have one universal, one-stop shop for individual savings where you can put your own money in. It grows tax free, and then you can use it for whatever you want and whenever you want without any strings attached. The Trump Account, because of the political process and the constraints in the big bill that it was part of, got contorted in that Congress wanted to add this this baby subsidy into the mix which then, when you start putting government money into the accounts, requires a bunch of new strings to be attached, so that people don't just take the money out immediately. The underrated piece of Trump Accounts is that to the extent that a less sophisticated family chooses to put their money in a Trump Account instead of somewhere else, you could be actively making those kids worse off if the dollar in the Trump Account faces higher taxes than where it otherwise would have gone. -So if a family has only one additional dollar to put into savings, where would it go the furthest? So with any client we say, what is your objective? If you are really looking to plan for your child's future and what they're going to do in terms of college or perhaps vocational school or something like that, a 529 plan one hundred percent makes the most sense because again you're putting in after tax dollars, it's growing tax-free and it's coming out tax-free. -The Trump Accounts work at the federal level. At the state level, Connecticut devised its own plan that gives children a jumpstart when they're born by contributing $3,200 to buy a so-called baby bond for the child. But there's a big difference. While the Trump Accounts are for all children, Connecticut's baby bonds are only available to those covered by the state's Medicaid system, inserting a redistribution factor into the equation. Erick Russell is the Connecticut State Treasurer. -The goal of the program is just very different than what we've seen out of the Trump Accounts. This program is designed to address wealth inequality in a long-term, big-picture way here in Connecticut. It is a program that is set right now to run at least 12 years, but our plan is to run that program in perpetuity. -Do you expect the savings and baby bonds to supplement existing assistance programs or perhaps even one day replace existing assistance programs? -So ideally we have people who are moving up out of poverty, and I think that was one key piece to getting support for this program, is we can look at an investment and say we can use resources to help sustain people who are living in poverty, or we can take resources and make an investment to help people lift out and not need to be on some of these programs or need that state assistance. -While Connecticut's baby bonds are designed with the explicit goal of addressing the wealth gap, Michel of the CATO Institute says Trump Accounts might have the opposite effect. -The way Trump Accounts are structured, because there are penalties on withdrawing the money before retirement and complex rules on what the money could be used for, families or children, when they turn 18 and get access to these funds that have the resources to help folks bridge to adulthood, will keep the money in the account and let it grow over time, where kids that are maybe from families with less means will face more pressure to take the money out, pay the government penalty, pay the higher taxes, and lose out on that growth over time. So if these rules aren't changed over the next decade or so, I think these accounts could actually make wealth inequality worse, not better. -Connecticut estimates that a $3,200 baby bond will grow to somewhere between $11,000 to $25,000 by the time the child is allowed to withdraw the funds between the ages of 18 and 30. On any given day, Russell is on the road talking to students and families about how he's managing the state's money. We joined him at Southern Connecticut University in New Haven, where he spoke with students in a Connecticut politics class. -I'm essentially the elected CFO of the state, right? And so I've managed all of the state's finances. -How did you come to this decision that baby bonds was the right move? Because it's going to be a long time before you see the benefit of this. -In this role, thinking about building a future economy, that requires investment, and that some of those long-term investments make sense. -As of this month, the Treasury Department announced that children under age 18 will be automatically enrolled in Trump Accounts, adding more than 60 million children to that program. -There are over 50,000 children that have been born eligible... -Russell says auto-enrollment is key to the design of any of these savings programs, including Connecticut's baby bonds. -Well, I think it's critical. Folks that you are most looking to connect with, people who probably could benefit most from a program like this, are the most likely to fall through the cracks, right? -So while automatic enrollment for Connecticut's baby bonds and the Trump Account is a crucial step one, understanding the tax treatment of any savings program is just as important. What's the biggest missed opportunity when it comes to saving for the future? -So I think a lot of families aren't taking advantage of tax-friendly vehicles. In the 529 space, you have 70% of families that are saving for college. Half of those families are sitting in cash. -What has this 529 product and its various iterations taught you about how to design a savings program that people will actually understand and actively use? -I would say the biggest thing I think the plan should do more proactively is automatic contributions, because it's tough to get somebody to invest. But what we find is only about 35% of people automatically invest every month. So that's the key, is not just start early, save often. So it's start early, save often, but don't just save, invest. -Watching your initial investment compound may seem like magic, but the reality of saving involves discipline and consistency. Once Robinson began actively saving for her two children's education, she targeted putting $500 in each of their 529 accounts every month. Her goal? Contribute $15,000 annually towards her son's college expenses. Today, her son is a freshman at the University of Minnesota, and merit scholarships mean she won't even have to tap the account for at least the first year. -When he started college, he had a healthy savings account of his own as well. And so I think that... I think... I think that was really good, because I think he feels more confident, certainly, managing his money as a college student than I did. -For Robinson, making a difference for her family started with talking with the kids about money and emphasizing the discipline of saving and the miracle of compounding so the next generation can experience it for themselves. Westin: Coming up, an industry on the brink of extinction in Alberta, Canada is being brought back to life, in no small part thanks to President Trump. Westin: This is a story about old dogs and new tricks. For decades, coal mining was a mainstay for Alberta, Canada. But as the world has moved away from burning dirty coal to generate electricity, most of the mines closed, with the inevitable effects on the local economy. But now, Canada is looking for new trading opportunities to offset tensions with the U.S., and it's finding one back in the mines of Alberta. Our colleague Michael McKee brings us the story of a small town where a proposed project promises new potential. -The world wants this coal. It needs it. -Not only is this a bad idea economically, not only is it a bad idea politically, I don't want to see this country messed up. -I am extremely, capital P, R, O, coal. -In the heart of the southern Canadian Rockies, on the western border of Alberta, lies Crowsnest Pass, home to 5 historic mining communities that lost the key driver of their economies years ago, when the nearby coal mines closed down. -When I was younger, Crowsnest Pass was very vibrant. There were a lot of businesses. And mines went away and businesses left. -You see this community just trying to struggle to have businesses and just a thriving culture. And I've seen it just really just struggle and limp along. -We are the forgotten corner of Alberta. And nobody really gives a [Beep] about us until we actually got a chance to get something good. -As the world turns its back on coal production, some in Alberta see opportunity. Northback, a subsidiary of Australian billionaire Gina Rinehart's Hancock Prospecting, wants to reopen and expand a mine in the area, which would be the first of its kind to open in Alberta in two decades. Local business owner and rancher Lucas Michalsky sees the new proposed mine as a beacon of hope. -Northback has put tens of million dollars into the Crowsnest Pass. All the people that are against it, I haven't seen them plant a single tree. I haven't seen them clean up a single old mine site. I've never seen them put any money into the Crowsnest Pass. You know what we are? We're a little drive-through town. This is a blue collar community. It always has been. And we've lost our logging. We've lost our oil and gas. Mining is the only thing we have left because we never really had much of the first two. So, yeah, this coal mine is very, very important for the community. -Located on an abandoned mine that closed in the 1960s, the Grassy Mountain Project was first proposed back in 2015 and initially rejected in 2021. Since then, Northback has been attempting to revive it and plans on submitting a new proposal within the next 6 months, with planned production starting in the next few years. The mission is to mine millions of tons of steel-making coal, otherwise known as metallurgical coal. Do you have an economic estimate for the benefits to this area? -We think on an annual basis, as much as 90% of our spend on OpEx will be within Alberta. Eventually, this will be part of our overall pit operations. -Brad Johnston is the CEO of Northback. How big is the export volume for Canada right now? -For steel-making coal produced in British Columbia, they're producing between 25 and 30 million tons a year. And our production is going to be about 2.5 million tons a year. So let's say 10% of what they produce in B.C. That's what we would expect we produce at Grassy Mountain. -What makes this coal deposit especially valuable is its unique chemical composition. Unlike most coal, which is burned for electricity, this higher grade material is used to make steel. Ian Lange is a professor from the Colorado School of Mines. -So the difference between met coal and thermal coal is generally just the amount of impurities within the coal. And so the less sulfur, ash and moisture, the more likely you can turn something into met coal. If you would like to take met coal and move it into steel, right? You would mine the met coal from the ground, you would put it on presumably a rail line, have that railed to a port. That port would then ship it to wherever the met coal is going to be turned into coke. Once it's become coke, it can go into a steel mill, and the steel mill combines the coke with iron ore to make steel. -Alberta has some of Canada's richest metallurgical coal deposits. But since 1976, provincial policy has restricted where new mines can be developed. Today, met coal production is nearly 85% below its 1982 level. Brad Johnston thinks that could change. He believes that rising demand for met coal will meet faltering supply lines, constrained by dwindling resources at already existing mines and strict regulations. -We think as early as 2030, there's going to be undersupply of steelmaking coal. And by 2040, it could be as much as 100 million tons a year. So that's one of the factors that makes us interested in this development because the world very much wants this coal. -Met coal can be found around the world, but global exports are concentrated in just a handful of countries, with Australia, the United States, Mongolia, Canada and Russia making up 95% of the total. -This met coal project would presumably benefit allies like Japan and South Korea as they're able to get the resources they don't have domestically. -And that potential demand comes as Canada is looking for more customers beyond the United States. Heather Exner-Pirot is a Senior Fellow and Director of Natural Resources, Energy and Environment at the Macdonald-Laurier Institute. -When we talk about diversifying trade alliances, when we talk about being, you know, more relevant to different countries, I think metallurgical coal could provide a great opportunity for that. -In the wake of trade frictions with the United States, Canadian businesses and policymakers are looking for ways to diversify. In September, Prime Minister Mark Carney released a bill to speed up the approval process of infrastructure projects. Mining is high on the agenda. -Since Trump was elected, there's been much greater emphasis on resource development. Public opinion towards it has gone much more positive. And people see that we do want to trade with other partners. We want to trade more with Asia. We want to trade more of our resources. And obviously for many nations, for Europe, for the United States, for India, they consider metallurgical coal a critical mineral. So it is going to become more and more a tool of soft power and building alliances. -One of the benefits of our coal, it has low phosphorus and low sulfur. And those particular characteristics are desirable for European steel makers. And that would be, let's say, pretty consistent with some of the discussions taking place now between Prime Minister Carney and the EU. I recently had discussions with steel mills in Japan and Korea, as recent as 2 or 3 weeks ago. And they are very interested in pursuing us as one of their suppliers. -So how much coal is in the mountain? -Our models show we have upwards of 200 million tons of raw coal in the mountain. And right now we're thinking we're going to have approximately 100 million tons of economic coal that we will produce. We think it will be about 25 years of mine operations. -While Northback expects 25 years of economic development... -The first thing you see is deformities in fish. -...some Canadians are worried about the longer-term impacts of the mine, and whether the company will make good on its promises. Corb Lund is among the skeptics. -I don't believe anything they say, frankly. And I don't think they're telling the truth. But in my opinion, they're just lying, and they'll say anything they've got to do to get in there with the bulldozers and mine our coal. -Lund is a country singer turned environmental activist whose connection to the land stretches back generations. -My family's been here for 120 years. My great-grandfather, he's from Utah, he settled here in 1902. People don't often associate ag people with conservation, but generational ranching is really about conservation. -The musician started the "Water Not Coal" petition in early 2026 to ban all new coal mining in the eastern slopes of the Canadian Rockies. The petition received over 170,000 verified signatures, falling just short of the 178,000 needed to put the issue to Alberta voters. -We've been asking for 5, show us 5 examples in the world where this kind of mine doesn't contaminate the groundwater, they can't do it. The only groups of people who want these mines are A, the Aussie coal companies, B, the small handful of people who get the jobs, very few jobs, which will be automated away as we speak, and the government people. -Although Lund's ranch will not be directly affected by water contamination, he says his concern is for the surrounding communities. -So there's lots of reasons these coal mines are a bad idea, but water is the biggest one. And it's not only a quality issue, but a quantity issue. The quality comes into play with the sediment... or the contaminants that get released into the groundwater by this kind of coal mining. Selenium is the one that comes up a lot. These coal mining companies have told us over and over they don't need any of our water. And then recently they just applied for a big water license. And so I don't trust them at all on this stuff. They're just saying whatever they've got to say to get in there. But we've got to protect the water. -Other local residents who live nearby share Lund's concerns. Lethbridge, a city of about 110,000 people, gets its water from the Crowsnest watershed. And the city's former mayor says that the mine would put surrounding jobs at risk. -What happens with coal is there's usually a lot of dust created. And here we have some of the strongest winds in Alberta and Canada. So that windblown coal dust is going to blow as far as 100 miles from the mine. And it's going to contaminate the water. It's going to contaminate the air. It's going to contaminate the soil. Why would you jeopardize 40,000 jobs to create 400? -Let's continue talking about water, because that's the big issue for opponents. -How we're going to address the matter of selenium will be like a multi-layered system of controls. So first thing is we're going to have a water treatment facility, a plant, on site on day one. And the other thing we're committing to do is after mining is completed for as much as 25 years, we're going to run, or continue to run, the waste treatment facility until the actual data or water testing tells us that we can shut them down and the site can actually just administer itself. -Another problem on the environmental side that people are concerned about is coal dust. Everybody who lives here tells us the wind blows tremendously here and they're worried that the coal dust will spread, not just around the town, but will spread east and land in the agricultural areas and do some damage. -It's our assessment that this won't be a regional problem. However, one of the ways we control that is using water to control dust. -Why should people here trust you? -Ah, goodness, that's a good question. Um, we've invested almost $200 million in operating costs in the province, in the area. And we're living up to our commitments. We hire local. We try and be a good neighbor. We engage with First Nations. We have community engagement. And so trust is something, I think, that not necessarily is given. We have to earn it and we try and do that. -It's certainly not uncommon for a firm to say, "Hey, trust us." It's very difficult to sort of lock a company in to fulfilling environmental regulation or reclamation rules well after, say, the mine has closed or well into the future. So, yeah, it's really hard to say with certainty that this won't be a problem 30, 40 years down the line. -The Alberta Energy Regulator will ultimately decide if Northback's application will move forward. A decision which could be as long as a year away. Leaving residents to either daydream about the future... -♪ Take a close look ♪ At the stock that you own -...or fight for their home -♪ 'Cause this is my prairie ♪ This is my home [Guitar playing] Westin: Next, is sovereign debt crowding out the rest of the market? Westin: Bond yields have moved sharply higher, with a wide range of reasons given or speculated about. From all that AI borrowing to the overall strength of the economy to the price of oil. But one thing that everyone seems to agree on is that sovereign borrowing by the United States and other developed economies isn't helping, as Loren Moran of Wellington Management explains. There is a lot of sovereign lending going on. Certainly the United States, but not just the United States. You look at France, you look at Japan, you look at the UK. What's the choice that you make between going the sovereign route versus going AI? -Yeah, I mean, it's interesting because at this cycle, we've actually seen all the leverage come from developed market sovereigns. We don't have a levered consumer. We don't have particularly levered corporate balance sheets. We do have a very large capex cycle. But this is in a portion of the universe that actually has very under-levered balance sheets to begin with. Where all that leverage has actually really been born by sovereigns. As we've seen much more fiscal largesse and very little restraint in terms of managing deficits globally. The impact of that is just, you know, that as an investor, I think it certainly questions the value of diversification. But also what you're getting paid for incremental risk. And so when I think about the U.S. investment grade market, yields are very attractive. But as a percentage of your total yield, the component coming from credit risk is only 13%. So to me, the tradeoff is actually fairly easy. I would greatly prefer to have both the liquidity and to have the safety of lending to the U.S. government, instead of thinking about a more questionable cycle going forward as we start having fiscal headwinds and monetary policy tightening lending to corporate balance sheets. And so I think it's ultimately just a question of what is that value of the diversification away from sovereign balance sheets. But I think that tradeoff is becoming more challenging here. And I personally am favoring sovereign balance sheet lending and that liquidity more so than corporate credit in this environment. As hyperscalers saturate the U.S. market, they're actually saturating every market globally. Westin: Both in terms of volume and pace, actually, velocity, comes against a backdrop of other things going on in the bond market, particularly when it comes to sovereign bonds. You start with U.S. Treasuries and the higher yields. I mean, highest in 20, 24 years. What connection, if any, is there between the two of those? Does one bleed into the other? -You will hear people suggest that Treasury rates are higher because of the amount of issuance that has gone on in the investment grade debt markets. In particular, hyperscalers. I think you have to challenge that narrative a little bit in saying that the majority of the issuance from these folks, they really have been in the market since the summer. And so if you think about the moves we've seen in just the last two weeks, the move from 485 to 530 has nothing to do with hyperscaler data set issuance because there hasn't been any. I think you have to think systematically. There are still inflationary pressures that are very real. As we all know, diesel prices are higher. The Fed obviously has a lot to think about from the perspective of hikes or no hikes. The economy continues to be strong. And structurally, with $40 trillion of debt and seemingly not a lot of ambition or desire on either side of the aisle to do something about it, there's arguably more of a term printed in that debt. And that's also why you're seeing the curve steepen. There is a world in which we might issue more debt in investment grade markets next year than the U.S. Treasury issues. And of course, you can't say that that wouldn't have an impact on do I buy a Treasury or do I buy an investment-grade bond and get a little bit of a pickup. But I think it's unfair to say at this juncture that the magnitude of hyperscaler issuance is what's caused the selloff. I think those are much more bigger-picture economic issues that the market is adjusting to. Westin: So what is driving that, the sovereign debt yield expansion? -It's a handful of things. And you think about, let's take France, for example, not to pick on any one nation, but obviously OATs are significantly higher. There is meaningful concern about the election. It is a very big election next year. It's very polarized. And you think about the growth of that economy and sort of... and the spending that goes with it. What is the retirement age? The reforms that are needed, no one really has the willingness or desire to do. And so in a world where maybe the US can sustain a 5.5% tenure, let's say, because growth is strong and GDP is robust and we're in full employment. You can... you can sustain those debt rates. It is much harder to do where you have far less of an economic engine. And again, we are very driven, of course, by the data centers. Obviously, data center spending has been significant in that capex. And as we think about that flows into GDP have been strong. They're all based in the U.S. They're not based in France. And so it's twofold. You're worried about elections. You're worried about just the proliferation of spending and how you grow your way out of that or get it under control. And to a certain degree, there's a correlation. Rates, you always see rates, in some degree, trade in tandem. And so as one market goes higher, the bond vigilantes come out and they're reminded that the problems aren't necessarily isolated to just France, to just the UK, to just the U.S. It's really a global issue. And how do we think about that? And who... who can win in that race, if you will? Westin: Is it too farfetched to suggest the reverse on that? This is... Look it, I think the United States government can be the French government, can be Japanese, can be UK. You're borrowing too much. You have already a lot of debt on your balance sheet. You're borrowing too much. I might be better off really lending to a corporation that has a really solid balance sheet. -That's a very interesting perspective. And I think that I'm sure that calculus is working with some of the investors because they're looking at some of these high quality names that are coming to the market. And then they're looking at some of the developed market debt that's coming in, I mean, issuance that's coming in, and making that sort of assessment. And I think that that's part of the reason why government bond yields are moving up dramatically. You look at the debt profile, say, for instance, the U.S., you're looking at 6% deficit to GDP, you know, over 100% debt to GDP. That in and of itself is not troubling as of now. But if you look at that trajectory over the next, you know, 10 years, it starts to deteriorate quite dramatically. And with general level of interest rates being much higher, what you're seeing is that the borrowing costs for governments are going up quite substantially. And more and more interest costs are the bulk of the deficits, especially in countries like the U.S. Westin: As far as we know, what's the mechanism by which that works? Is the bond market saying, wait a second, if you've got that much debt and that much deficit keeps going up, I'm not sure you're going to repay me? Or is it that I think you might just inflate your currency to get out of it? -So I think what investors are demanding is a term premium. They just want to be compensated more for taking on or buying that debt. Historically, government bond debt has been the most desirable. And they've had this kind of premium associated because of their safety, liquidity. Now that some of that safety and liquidity premium is starting to erode, so investors increasingly are demanding a higher term premium to take down government bond debt. Westin: There's been a move up, without doubt. Just stick with the U.S., for example, government debt in the yield on the 10 year or the 30 year. But how does it compare with where we've been historically? I mean, is this above historical norms? So the secular bear market and bonds began after the COVID crisis, right? We had yields bottom out. Yields have risen quite dramatically. The first leg higher was because we had higher inflation. Now you're starting to see this kind of debt, a glut of debt that's starting to push yields higher. But historically speaking, yields are not significantly higher than where they were prior to the financial crisis. So after the financial crisis, interest rates have been quite artificially kept lower. Term premium was compressed. Now you're starting to see the unwind of that trade. Westin: Maybe unfair. Is there a norm for term premium? Right now, it's a little over 1% under basis points. Is there a historical norm for the term premium? What should we be looking at? -That's a tricky question because it really depends on a variety of factors. If you look at the fundamentals in the economy, the U.S. economy is growing at a very healthy pace. That's another reason that's supporting higher term premium. Real interest rates are a lot higher. Inflation expectations are actually quite subdued in this environment, even though we talk a lot about inflation. So the term premium, where it's at, there's still room for term premium to reprice higher. Westin: That does it for us here at "Wall Street Week." I'm David Westin, see you next week for more stories of capitalism.