California’s Gavin Newsom Wants to Lead the Trump Resistance

Summary

WSJ What’s News: California’s Gavin Newsom Wants to Lead the Trump Resistance
Release Date: November 13, 2024
Host: Tracy Hunt

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1. Economic Updates: Inflation and Federal Reserve Rate Cuts

Consumer Inflation Trends
In October, U.S. inflation saw a slight uptick, rising by 2.6% year-over-year (01:16). This increase marked the fastest growth in three and a half years but remained modest enough to avoid derailing the Federal Reserve's plans for an interest rate cut in December. Core prices, excluding volatile food and energy sectors, increased by 3.3% (01:21), indicating underlying inflationary pressures.

Federal Reserve's Response
Despite the uptick, the Federal Reserve is likely to proceed with the anticipated rate cut, supported by solid consumer spending and steady hiring. However, the slight rise in inflation introduces a nuanced debate among officials about potentially slowing the pace of future rate cuts (01:35).

Market Reactions
Following the inflation report, market traders increased their bets on another Fed rate cut. The Dow Jones Industrial Average rose marginally by 0.1%, while the S&P 500 saw a slight gain of less than 0.1%. Conversely, the Nasdaq slipped by 0.3%. Notably, Bitcoin surged past $90,000 for the first time, reflecting investor optimism fueled by the prospect of a pro-cryptocurrency administration under Donald Trump (02:06 - 02:17).

Notable Insight:
Vicky Huang, WSJ markets reporter, attributed Bitcoin's rise to investor euphoria over Trump's pro-crypto stance and promises made during his campaign, such as creating a "Bitcoin reserve" and challenging the current SEC leadership (02:17).

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2. Automotive Industry Collaboration: Volkswagen and Rivian Partnership

Strategic Alliance Formation
Facing significant challenges, Volkswagen (VW) and Rivian, a struggling California-based electric vehicle (EV) startup, have announced a strategic partnership. VW will invest up to $5.8 billion in Rivian stock and a joint venture, aiming to leverage each other's strengths to overcome their respective weaknesses (03:24 - 03:38).

Rationale Behind the Partnership

• Volkswagen: As the world's second-largest automaker, VW has a robust legacy in combustion engines but has struggled with cutting-edge EV production, particularly in software development (03:58).
• Rivian: While innovating in EV design, Rivian faces financial hurdles, losing approximately $39,000 per vehicle sold in the third quarter (03:29).

Potential Risks
The collaboration involves mutual dependency, with Rivian sharing its proprietary electronic architecture—a key competitive advantage—with VW. This raises concerns about Rivian potentially diluting its unique offerings (04:35).

Expert Commentary:
Siobhan Hughes, a Wall Street Journal reporter, highlighted the high-risk nature of this untested collaboration, noting the historical challenges of partnerships in the auto industry and questioning whether Rivian’s unique edge might be compromised (04:38 - 05:10).

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3. Political Landscape: Trump-Biden Transition and GOP Leadership

Peaceful Transition of Power
In a significant moment contrasting the tumultuous post-2020 transition, President Biden and President-elect Donald Trump met at the White House, emphasizing a "peaceful handover of power" (05:38). Trump appeared poised and enthusiastic, receiving a warm congratulatory message from Biden, who appreciated the smoothness of the transition process (06:02 - 06:24).

GOP Majority Leader Election
The Republican senators elected Senator John Thune of South Dakota as their new Majority Leader, marking the first leadership change in nearly two decades (06:55 - 07:03). Thune, a close ally of Mitch McConnell, is expected to prioritize continuity and navigate a delicate relationship with Trump while advancing the Republican agenda, including tax cuts and border policies (07:14 - 08:33).

Key Challenges for Thune:

• Advancing the Republican Agenda: Focus on tax reforms, government spending, and Trump-aligned border policies.
• Managing Narrow Margins: With a slim majority, maintaining party unity will be critical.
• Navigating Trump’s Influence: Balancing the leadership role while addressing Trump’s prominent position within the party.

Insight from John Thune:
Thune emphasized the importance of "continuity" over "radical change" within the GOP and the necessity to keep Republicans aligned on contentious issues like funding for Ukraine and internal party debates (07:18 - 07:55).

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4. California's Political Response: Governor Gavin Newsom Leading Resistance

Positioning Against Trump
California Governor Gavin Newsom is stepping into a prominent role to lead the resistance against President-elect Trump’s agenda. Within days of the election, Newsom called for an emergency special session of state lawmakers to "safeguard California values" (08:36 - 09:07).

Political Context and Challenges
During the campaign, California was portrayed as a symbol of Republican opposition, with Trump criticizing the state's policies on immigration, environment, and crime. Newsom’s efforts to counter Trump’s promises face new challenges as Trump garnered substantial support in the recent election, and California itself has experienced a slight rightward shift (09:12 - 10:27).

Democratic Party's Stance
There is uncertainty within the Democratic Party regarding support for Newsom's approach. While he has been considered a potential 2028 presidential contender, previous experiences, such as Kamala Harris’s national campaign, raise questions about the viability of another Californian leading the charge on a broader national stage (10:27 - 10:58).

Reporter Zusha Ellenson’s Analysis:
Ellenson highlighted the evolving dynamics, noting that the increased support for Trump and the shifting political landscape in California could pose significant hurdles for Newsom’s leadership and the broader Democratic strategy against Trump’s administration (09:10 - 10:58).

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Conclusion

The episode of WSJ What’s News dives deep into the intersecting worlds of economics, automotive innovation, and the high-stakes political arena following the 2024 election. From inflation trends and strategic industry partnerships to the nuances of political leadership and resistance, the discussion provides a comprehensive overview of the forces shaping the current landscape. Notably, Governor Gavin Newsom's attempt to spearhead the opposition against a pro-crypto Trump administration and the implications for California and national politics are central themes, reflecting the complex interplay between state and federal dynamics in this pivotal moment.

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Notable Quotes:

• Donald Trump (06:37):
  "Thank you very much. And politics is tough, and it's in many cases not a very nice world. But it is a nice world today."

• John Thune (07:18):
  "He understands a lot of the inside game of how the Senate works."

• Vicky Huang (02:17):
  "The prospect of a crypto-friendly Congress... further fueled the momentum of Bitcoin."

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Produced by Pierre Bienname and Anthony Bansi with Supervising Producer Michael Cosmides.

Transcript

[Public Service Announcement]

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[Tracy Hunt]

U.S. inflation rose in October, but not enough to derail a December Fed cut, and California's governor says he's ready for a showdown once Donald Trump takes office.

[Zusha Ellenson]

In almost every issue that Trump is promising voters to deliver on, it's directly opposite to California's policies on immigration, environment, crime, et cetera. Everything.

[Tracy Hunt]

Plus, Volkswagen and EV startup Rivian hatch a plan they hope will save both companies. It's Wednesday, November 13th. I'm Tracy Hunt for the Wall Street Journal. This is the PM edition of what's the top headlines and business stories that move the world.

[Stephen Wilmot]

Consumer prices edged up in October after having recorded the slowest rate of growth.

[Tracy Hunt]

In three and a half years in the previous month, a sign of how inflation continues to move lower on an uneven and bumpy path.

[Stephen Wilmot]

The U.S. labor Department today said that.

[Tracy Hunt]

Consumer prices in October rose 2.6% from a year earlier.

[Stephen Wilmot]

That marks a pickup from the previous month.

[Tracy Hunt]

Core prices, which exclude food and energy items in an effort to better reflect inflation's underlying Trend, were up 3.3%. The latest report likely wasn't enough to.

[Stephen Wilmot]

Derail another interest rate cut from the Federal Reserve in December. But together with solid consumer spending and.

[Tracy Hunt]

Steady hiring, firmer inflation could kick off.

[Stephen Wilmot]

A bigger debate at officials next meeting over whether to slow the pace of.

[Tracy Hunt]

Rate cuts early next year in US Markets.

[Stephen Wilmot]

Following the inflation report, traders ramped up.

[Tracy Hunt]

Bets on another Fed rate cut.

[Stephen Wilmot]

The Dow rose 0.1%, while the S&P5,500 eked out a slim gain of less than 0.1%.

[Tracy Hunt]

The tech heavy Nasdaq slipped 0.3%. The price of Bitcoin topped $90,000 for the first time today, building on a.

[Stephen Wilmot]

Hot streak since Election Day. Wall Street Journal markets reporter Vicky Huang says the new record reflects investor euphoria over the prospect of a pro crypto president.

[Vicky Huang]

One of the major factors for this is that Donald Trump won the presidential election and he has been very vocally pro crypto since. Earlier this year. He made a series of promises to the crypto industry, including creating a so called bitcoin reserve to halt the nation's supply of bitcoin and firing Gary Gensler, who is currently the chair of the securities and Exchange Commission and who has been leading this fight to police the crypto sector and the crypto industry backed a lot of congressional candidates and most of them have won their races. So the prospect of a crypto friendly Congress, that again further fueled the momentum of bitcoin.

[Tracy Hunt]

Two car makers facing multiple challenges are.

[Stephen Wilmot]

Teaming up to help each other.

[Tracy Hunt]

Rivian, the struggling California EV startup, and German automotive pioneer Volkswagen. According to final terms announced late yesterday.

[Stephen Wilmot]

VW, the world's second largest automaker, will.

[Tracy Hunt]

Invest up to $5.8 billion in Rivian stock and a joint venture.

[Stephen Wilmot]

In return, the German company gets access.

[Tracy Hunt]

To much needed technology.

[Stephen Wilmot]

Joining us now is Wall Street Journal reporter Stephen Wilmot.

[Tracy Hunt]

Stephen, why are they doing this? How will it help them?

[Siobhan Hughes]

They have very different problems. Volkswagen has a very strong legacy business selling largely combustion engine cars, but it has really struggled to produce cutting edge EVs. A really key reason for that weakness is it's really struggled to perfect the software. On the other hand, Rivian has come up with some really cutting edge EVs, but it's really struggled financially. In fact, it lost about $39,000 on every vehicle it sold the third quarter. So basically, the rationale for this deal is that these companies can help each other fix their biggest weakness.

[Tracy Hunt]

And what are the risks for each carmaker?

[Siobhan Hughes]

The real risk for both companies is that they're betting on each other and a kind of untested collaboration for this really crucial strategic project. Collaborations have a rocky history in the auto industry. Rivian has said that its electronic architecture is a core competitive advantage and now it's sharing it with Volkswagen and it's also saying that it wants to use that to share it more widely. So I guess there really is a question of is Rivian going to dilute what makes it special by opening up its crown jewels, as it were?

[Stephen Wilmot]

Stephen Wilmot is the Wall Street Journal's European autos reporter.

[Tracy Hunt]

Thank you, Stephen.

[Siobhan Hughes]

Thank you.

[Tracy Hunt]

Coming up, being a California Democrat can be a liability in national politics, but that isn't stopping the state's governor from trying to lead the Trump resistance. That's after the break. President Biden and President Elect Donald Trump.

[Stephen Wilmot]

Shook hands and emphasized a peaceful handover.

[Tracy Hunt]

Of power during a meeting today at the White House, a moment that stood.

[Stephen Wilmot]

In contrast to the discord that followed Biden's 2020 victory over Trump.

[Tracy Hunt]

The meeting marked Trump's dramatic return to Washington. He reveled in the attention as he.

[Stephen Wilmot]

Stands poised to take over in January.

[Tracy Hunt]

With the Republican Party united behind him. And as he builds out an administration of loyalists today, he named Florida Congressman Matt Gaetz as attorney general as he tries to bring the Justice Department under more direct presidential before entering a meeting.

[Stephen Wilmot]

That lasted roughly two hours, Biden and.

[Tracy Hunt]

Trump sat across from each other for.

[Stephen Wilmot]

Photographs, but didn't take questions from reporters. The president congratulated Trump on his victory.

[Tracy Hunt]

And welcomed him back. And in return, the president elect thanked him.

[Donald Trump]

Thank you very much. And politics is tough, and it's in many cases not a very nice world. But it is a nice world today. And I appreciate very much a transition that's so smooth, it will be as smooth as it can get, and I very, very much appreciate that, Jim.

[Stephen Wilmot]

Meanwhile, GOP senators chose South Dakota Senator.

[Tracy Hunt]

John Thune as their majority leader, their.

[Stephen Wilmot]

First new leader in nearly 20 years.

[Tracy Hunt]

Thune beat Texas Senator John Cornyn and.

[Stephen Wilmot]

Florida Senator Rick Scott. Joining us now is Siobhan Hughes, a reporter covering Congress for the Wall Street Journal. Siobhan, what does Thune's election say about.

[Tracy Hunt]

How GOP senators are approaching this second Trump term?

[John Thune]

What it tells us is that at least for now, a majority of the conference is prioritizing as much continuity as they can over a sort of radical change. John Thune has been serving as the number two Senate Republican, the whip. So he is a very close Lieutenant of Mitch McConnell. He understands a lot of the inside game of how the Senate works. He can see around corners and understand some of the risks that the Senate Republican Conference might be running if they open up the process too much in ways that a lot of the rank and file have demanded.

[Tracy Hunt]

Looking ahead, what are Dune's biggest challenges? Immediately and down the line, he's got.

[John Thune]

To advance the Republican agenda, which for now center, for example, on tax cuts, on government spending, and things like Trump's border policies. And so he's going to have to keep all of his Republicans in line around what is going to be a very, very contentious set of debates because he's got a very, very narrow margin. And then he's also going to have to manage the relationship with Donald Trump. He's also going to have to manage some difficult talks over things like funding for Ukraine. And so there is really going to be no shortage of places where Thune is going to have a tricky time.

[Stephen Wilmot]

That was our reporter Siobhan Hughes.

[Tracy Hunt]

Thank you so much, Siobhan.

[John Thune]

Thank you. Good to be here.

[Tracy Hunt]

As the Democratic Party licks its wounds.

[Stephen Wilmot]

And looks for a way forward, California Governor Gavin Newsom is positioning himself as.

[Tracy Hunt]

A leader of the resistance and a defender of liberal values.

[Stephen Wilmot]

Within two days of the election, Newsom set the stage for a face off.

[Tracy Hunt]

With President Elect Trump by calling on.

[Stephen Wilmot]

State lawmakers to convene an emergency special.

[Tracy Hunt]

Session to, quote, safeguard California values.

[Stephen Wilmot]

Zusha Ellenson is a WSJ reporter based.

[Tracy Hunt]

In Northern California, and he joins us now.

[Stephen Wilmot]

So, Zusha, during the campaign, California was at the center of many of Trump's.

[Tracy Hunt]

Attacks on his opponent, Kamala Harris. What are Democrats saying about another California politician positioning himself as a possibility presidential candidate?

[Zusha Ellenson]

So California, as in many past national campaigns, really became a symbol of everything that Republicans are saying is wrong with this country. And almost every issue that Trump is promising voters to deliver on, it's directly opposite to California's policies on immigration, environment, crime, et cetera. What's happening now is Gavin Newsom, the governor of California, very telegenic guy, is positioning himself as sort of the leading antagonist to Trump, sort of leading the liberal charge. He did this last time, and it really propelled him on the national stage. A lot of people looked towards California, especially during COVID and Newsom's profile really rose. But it's different this time, very different. And the difference is that Trump got a lot more support on Election Day. And California itself has shifted somewhat rightward during this election. So people are questioning how are they going to lead this charge against Trump if the ground has shifted beneath them.

[Tracy Hunt]

Are Democrats buying Newsom's approach to this Face Off?

[Zusha Ellenson]

That's the real question I think we need to ask right now. Certainly during the last four years of Trump, Democrats were buying it, but now it may be a little different. People have mentioned Newsom as a potential 2028 contender in the presidential election. But after Kamala Harris, who's part of his cohort here, a California politician, failed on the national stage, people are wondering if nationally, Americans have an appetite for another Californian.

[Tracy Hunt]

That was our reporter Zusha Ellenson.

[Stephen Wilmot]

Thank you so much.

[Tracy Hunt]

It's great talking to you.

[Zusha Ellenson]

Thanks for having me, Tracy. Really appreciate it.

[Stephen Wilmot]

What questions do you have about Trump's.

[Tracy Hunt]

Campaign promises, how they may be implemented, and what they mean for you?

[Stephen Wilmot]

Send a voice memo to wnpodsj.com or.

[Tracy Hunt]

Leave a voicemail with your name and location at 212-416-4328. We might use it on the show. And that's what's news for this Wednesday afternoon. Today's show was produced by Pierre Bienname and Anthony Bansi with supervising producer Michael Cosmides. I'm Tracy Hunt for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.