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Meta is investing $600 billion in AI infrastructure, bringing jobs to communities across America. Phil a Meta building engineer in Las Lunas, New Mexico, says welcoming Meta into our community is creating more opportunities. Learn more@meda.com BuildingAmerica.
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It's Fed Day. We'll look at the divide among policymakers on the wisdom of interest rate cuts. Plus Australia Bans teens from Social media.
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In a world first Today we change a gener generation. Today we change a culture. Today we change lives for the better.
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And Miami swings Democratic for the first time in decades. It's Wednesday, December 10th. I'm Luke Vargas for the Wall Street Journal, and here is the AM edition of what's news, the top headlines and business stories moving your world.
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We begin in Australia, where a landmark social media ban for children under the age of 16 is now in effect, with governments around the world keeping a close eye on how it'll work in practice. Politicians, parents and mental health experts have been calling for the bans as more studies have shown that social media can worsen feelings of anxiety and depression. Here was Australian Prime Minister Anthony Albanese speaking alongside Communications Minister Annika Wells in Sydney.
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Technology can have an amazing impact on making our life easier. But it is important as technology develops, that humans keep control, that we assert our authority as a society and to back families and to say that enough is enough, we will take back control.
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For many years, the world has allowed the idea that the Internet can have different rules from real life, that somehow it can be a free space unregulated by any of the values by which we govern ourselves.
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The people the prime minister has gathered here today are the people who refuse to leave this dilemma in the hands of someone else. You are the people that took this on and demanded children come before trillion dollar companies.
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So this is about the parents who have kids who could not be here today.
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Children younger than 16 will now be banned by law from holding accounts on platforms including Facebook X and TikTok. With social media companies facing fines of more than $30 million if they fail to take reasonable steps to remove the accounts. Meta was the first tech giant to react. It began deactivating accounts on Facebook, Instagram and threads ahead of the ban last week. At the same time, teenagers have argued that the ban hurts free speech, with Australia's high court agreeing to hear a challenge to the ban. Tech companies have made the same argument. And as tech reporter Sam Schechner explained in our latest Sunday episode, these types of bans present a real threat to their future profits.
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In many cases, these companies aren't perhaps currently actively monetizing young teen users. That's sort of one of the concessions that they made in efforts to stave off just this kind of legislation. That being said, we know in part from our Facebook files reporting that the social media companies look at these young users as their future adult user base. And now is the time when they can help attract users build habits that will continue to keep their companies with healthy user bases that generate revenue into the future.
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And it seems that Big Tech could be facing a seismic shift now, with other countries including Malaysia, Denmark and Norway looking to implement similar bans. And US States like Florida and California are also moving to curtail young people's access to social media. For more on Australia's social media ban, check out the latest Sunday episode in your podcast feed. We've also left a link to it in our show.
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Notes.
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Investors are pricing in an almost 90% chance that the Fed will lower interest rates later today. Chair Jerome Powell has made his own cutting intentions pretty clear. But as Journal deputy finance editor Quinton Webb is here to discuss, there's a notable lack of consensus among the bank's policymakers about which way the central bank should be heading. Quinton, you've pulled together recent comments by All12 officials who will be weighing in later today. You sort of sorted them into camps. Tell us what you found.
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Well, so you can see that there is quite a big split. I think you could probably divide them into three big camps. The hawks who would probably want to be careful about a cut because they're worried about inflation, which has run above target for several years. The doves who would prefer to cut rates because they're worried about where the labor market is headed, and they think that the effect of tariffs on inflation is overstated. And then there's the third camp of the kind of undecideds where their public comments to date have been pretty carefully hedged, and so you can't quite tell where they stand. And what we saw in mid to late November was that one influential Fed policymaker, John Williams, the New York Fed, came out in favor of a cut, and effectively that signaled to the market that a cut was going to be likely because the balance overall was shifting that way. And Powell was probably likely to go in that direction as well. There's some sense that some senior Fed officials are close allies of Powell, let's put it that way. And so if they say something, it's likely to track with what he's thinking.
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Has that been the trajectory of this cohort? A little bit more in favor of a cut the last few months because we stand at a strange point, nagging inflation on one hand and then concerns about weakness in the labor market on the other. Normally, those would be pulling in separate directions.
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Correct. So for a while, the Fed has had this kind of difficult trade off to balance, but it has been reasonably united behind cuts. If you recall, there have been two cuts so far this fall. In the second of those at the end of October, there were two dissents, actually, but they were notable because they went in both directions. So one governor, the governor of the Kansas City Fed, wanted to hold off on a cut, Jeffrey Schmidt. And then on the other hand, we had Stephen Moran, who is Trump administration economic adviser, who's on leave from that position to serve as a Fed governor. And he actually dissented in favor of a bigger cut. So he really thinks the Fed should go big in easing policy.
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Finally, Quinton, how might President Trump's opinion fit into this? We know he wants to lower rates. He also tried to have one of the Fed governors removed, albeit unsuccessfully so far. But do you see politics factoring more into how the Fed goes about its decisions here, or at least in the future?
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It's unquestionably going to factor more into Fed decision making in future. So Chair Powell's term as chair is up in May, and markets are pretty convinced that his replacement will be Kevin Hassett, a close economic adviser to the president who has shown interest in lowering rates, making policy easier. And then the Trump administration seems to be considering potential levers it could also pull to change the makeup of the committee more broadly. We've just seen a willingness from the Trump administration, including Treasury Secretary Bessant, to be much more vocal about what they perceive as the shortcomings of the Fed and its decision. And on both sides, the people who are hawkish and the people who are dovish. We have seen this kind of increasing willingness to be public and voice your contesting opinion loudly, I think, because everyone feels they need to stake their position. So we may see at the very least, a kind of more contentious decision making process in the months ahead, even before a change of the chair.
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It will make your job putting together articles like this maybe a bit easier in future. We'll see what the effect will be. I've been speaking to Wall Street Journal deputy finance editor Quintin Webb. Quinton, thanks as always for stopp.
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Thanks so much.
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Coming up, we'll get the reaction from Tokyo after Chinese and Russian bombers hold a joint exercise near Japan. And President Trump accuses Democrats of stirring up Talk about affordability. Those stories and more after the break.
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Japan is accusing China and Russia of carrying out a show of force after bombers from the two countries flew near Japan and South Korea today. I asked our Tokyo bureau chief, Jason Douglas, what to make of the Joint Patrol.
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So Chinese military activity close to its neighbors in Asia is clearly not something that's new. These joint patrols of Russian bombers, though near to Korea and Japan, are certainly notable for a couple of reasons. One is the fact that this is a joint exercise. Now, this was a long flight. This was eight hours, according to the Russian state media. The second reason why it's notable is this is, of course, happening at a time when tensions between China and Japan are pretty intense. Right. So there has been this sort of diplomatic spat which has been rumbling on for a month now. And Beijing was extremely upset at some remarks that Japanese Prime Minister Sanae Takechi made in Parliament about a month ago where she said that it was a possibility that Japan could get pulled into any conflict over Taiwan. So this is certainly something to take note of.
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Yeah, Jason, really, any talk about what would happen in an attack against Taiwan gets pretty much right to the core of American alliances in the Pacific. I see that the U.S. ambassador to Japan has expressed support for Japan, but that more senior U.S. officials haven't yet weighed in here.
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We haven't heard from any senior officials in the administration, which strikes many people as pretty unusual. We haven't heard anything from the secretary of state or the secretary of defense. We haven't heard anything from the president himself. President Trump is very focused on trying to secure a trade deal with China and that he is anxious to make sure that these kind of diplomatic disputes between China and US Allies do not derail that. Our reporting indicates that he, in fact, told Prime Minister Takeichi that she should take care not to provoke Beijing on this issue, though the Japanese government has denied that.
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And let's close things out with US Politics, starting in Florida, where Eileen Higgins became the first Democrat to win election as Miami's mayor in almost three decades. The race became infused with larger issues like affordability and was partly considered a referendum on President Trump's immigration policies.
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We will confront the affordability crisis with the urgency Miami's families need and above all, we will lead a city that belongs to everyone.
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Higgins there was speaking courtesy of WSVN tv. Her upset in Miami follows a series of recent elections in which Democrats won or outperformed expectations, next touting the strength of the US Economy. President Trump told supporters in Pennsylvania last night that rising prices were the fault of the Biden administration. The speech was part of a messaging shift meant to address voter concerns about affordability, though Trump took issue with that word, pinning its emergence as a talking point as the work of Democrats.
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Prices are coming down very substantially, but they have a new word. You know, they always have a hoax. The new word is affordability.
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So they look at the camera and they say this election is all about affordability.
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And senators are set to hold a pair of key health care votes tomorrow, fulfilling a pledge that Republican leaders made to Democrats in exchange for ending the government shutdown last month. The GOP proposal doesn't include the extension of expiring Affordable Care act subsidies and and would instead fund health savings accounts. And that's it for what's news for this Wednesday morning. Today's show was produced by Hattie Moyer and Daniel Bok. Our supervising producer is Sandra Kilhoff. And I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show, and until then, thanks for listening.
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Headlines move fast, but the University of Michigan moves faster, solving the problems behind them for the public good. Look to Michigan. See what Michigan is solving at umich. Edu.
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Look.