First an Energy Crisis. Now El Niño?

Summary

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WSJ What’s News – “First an Energy Crisis. Now El Niño?”

Date: June 24, 2026
Host: Luke Varkas

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Episode Overview

This episode examines the compounding economic and political crises currently facing the global economy, with a particular focus on the emerging El Niño weather cycle and its far-reaching impacts. Coverage spans from significant political shake-ups in U.S. Congressional primaries to the looming economic fallout of volatile energy prices, topped with a deep dive into how El Niño could be the “next big test” for Asia and global markets amid ongoing shocks from Middle East conflicts.

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Key Segments & Insights

1. Political Upheaval in the U.S. Congressional Primaries

[00:33 – 03:11]

• Progressive Surge in NYC:
  • Mayor Zoran Mamdani-backed candidates prevailed over mainstream Democrats, signaling an anti-incumbent wave.
  • Notable upset: Darielisa Avila Chevalier, 32-year-old Democratic Socialist, unseated Rep. Adriano Espiont (former first undocumented immigrant in Congress).
    • Chevalier’s quote:

      “Nothing about the affordability crisis and looking the other way while the real estate corporations that funded his campaign raised our rents and priced us out of the community that we love.”
      (Darielisa Avila Chevalier, 01:59)

  • In another race, Assemblyman Micah Lasher outpaced Jack Schlossberg (JFK’s grandson).
• South Carolina GOP Race:
  • Allen Wilson wins amid mixed endorsements from President Trump.
• Bipartisan Housing Legislation:
  • Congress passes ambitious housing bill aiming to ease regulations and spur home construction—though developers say a lack of new funding and inability to alter local zoning limits real impact.

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2. Europe’s Heat Wave and Climate Impact

[03:14 – 04:08]

• Severe Weather:
  • Heatwave causes school closures, travel delays, and increased deaths.
  • Telling stat: Only 1 in 20 Brits have air conditioning vs. 9 in 10 Americans.
• Global Climate Warning:
  • Antonio Guterres:

    “London isn’t just calling, it’s cooking. Around the world, climate disasters are becoming more frequent, more destructive and more costly.”
    (Antonio Guterres, 03:48)

  • Allianz estimates: Heatwaves could drain 5–7% of European GDP by 2030.

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3. U.S. Gasoline Pricing and Strait of Hormuz Update

[04:08 – 06:34]

• Presidential Criticism:
  • President Trump claims oil companies are price-gouging, instructs DOJ to investigate.
• Market Dynamics Explained:
  • Alex Frango’s explanation of price lags:

    “What you put in your gas tank is not oil, it’s gasoline... all the gas station owners... had to go out and buy much more expensive gasoline. They’re not going to lower prices while they’re still selling the gas that they paid higher prices for... Politicians are often very frustrated at the way the market works. But the market does work, and the lower prices you see... will eventually get to the gas pump.”
    (Alex Frango, 04:50)

• Strait of Hormuz Status:
  • Tankers and cargoes moving, but at a reduced rate due to ongoing navigational hazards.
  • Frango on shipping delays:

    “It’s more of a trickle... The main shipping channel, there are concerns about there being mines... there isn’t the capacity to get the hundred ships a day.”
    (Alex Frango, 05:55)

  • Over 11,000 seafarers remain stranded, evacuation pending.

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4. Global Business Briefs

[06:34 – 08:02]

• Alibaba:
  • Sues U.S. Dept. of Defense over Pentagon blacklisting; denies military ties.
• Agility Robotics:
  • Set to go public via Churchill Capital in a $2.5 billion SPAC deal.
• Tease for El Niño Deep Dive:
  • Asia still coping with Iran war fallout—up next: the ripple effects of El Niño.

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5. Deep Dive: El Niño’s Economic Threat

[08:20 – 13:44]
Guest: Frederick Neumann, Chief Asia Economist, HSBC

El Niño’s Amplified Effects on Asia

• Compounding Crises:
  • Recent Iran war and Strait of Hormuz closure caused fertilizer shortages and high prices, pre-setting Asia for food supply shocks.
  • Neumann:

    “For the coming harvest season... we already had expected rising food prices because there wasn’t just enough fertilizer to go around. Now that we have an extra layer of very volatile weather... that’s going to just exacerbate the stress on farmers.”
    (Frederick Neumann, 09:01)

• India as Epicenter:
  • 45% of Indian agriculture is rain-dependent; droughts and high temperatures likely.
  • Disruption not only threatens India but reverberates globally through rice, sugar, and commodity exports.
    • Neumann:

      “If there is agricultural stress in India, it not only pushes up food prices in India, but even affects countries... in Southeast Asia or even the Middle East itself, parts of Africa. So that radiates really out from India to other economies.”
      (Frederick Neumann, 10:06)

  • India has already placed export restraints on sugar, escalating global sugar prices.
• Energy Risks – From Oil to Hydropower:
  • Initial crisis was fossil fuel shortages; now there’s threat to hydropower, e.g. in Vietnam, which gets a quarter of its electricity from hydro.
    • Neumann:

      “We have one energy crisis being replaced by potentially another energy crisis. One was just fossil fuel-based, the other one is hydropower-based, and that’s all because of weather.”
      (Frederick Neumann, 11:45)

• Global Macro Impact:
  • Each El Niño seems to bring bigger economic disruptions: stressed infrastructure, volatile prices, reduced growth, and higher costs of resilience.
    • Neumann:

      “The risk is that you’re having these adverse weather events that put stress on infrastructure, it leads to more volatile prices, and that ultimately reduces economic growth... In the short term, these events can be quite disruptive.”
      (Frederick Neumann, 12:44)

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Notable Quotes

• Darielisa Avila Chevalier, on affordability crisis:

  “Nothing about the affordability crisis and looking the other way while the real estate corporations that funded his campaign raised our rents and priced us out of the community that we love.” (01:59)

• Antonio Guterres, on climate:

  “London isn’t just calling, it’s cooking. Around the world, climate disasters are becoming more frequent, more destructive and more costly.” (03:48)

• Alex Frango, on gasoline prices:

  “Politicians are often very frustrated at the way the market works. But the market does work, and the lower prices you see... will eventually get to the gas pump.” (04:50)

• Frederick Neumann, on food and energy shocks:

  “We have one energy crisis being replaced by potentially another energy crisis. One was just fossil fuel-based, the other one is hydropower-based, and that’s all because of weather.” (11:45)

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Key Timestamps

• 00:33 — Main headlines and U.S. primaries
• 01:59 — Chevalier’s victory speech
• 03:14 — European heatwave and Guterres climate warning
• 04:08 — Trump’s DOJ threat to Big Oil
• 04:50 — Alex Frango explains gas prices
• 05:55 — Frango on Strait of Hormuz shipping delays
• 08:20 — El Niño segment introduction
• 09:01 — Neumann on Asia’s “double whammy” risk
• 10:06 — India’s agricultural vulnerabilities
• 11:45 — Hydropower risks from El Niño
• 12:44 — Neumann on macroeconomic threats of repeated El Niño cycles

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Tone & Final Takeaways

The episode’s tone is urgent but measured, reflecting concern at the interlocking crises hitting the global economy—from politics to the weather. The experts emphasize how the convergence of energy shocks and extreme climate events like El Niño now tests economic resilience across continents, heightening the need for long-term adaptation even as short-term disruptions hit home.

Transcript

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[Luke Varkas]

Zoran Mamdani leaves his mark on New York's congressional delegation, boosting his standing as a Democratic kingmaker. Plus, President Trump threatens Big Oil with a DOJ probe over prices at the pump. And we'll look at how El Nino could be the global economy's next big test.

[Frederick Neumann]

We already had expected rising food prices now that we have an extra layer of very volatile weather, high temperatures, drought that's going to just, just exacerbate the stress on farmers on the agricultural sector.

[Luke Varkas]

It's Wednesday, June 24th. I'm Luke Varkas for the Wall Street Journal and here is the AM edition of what's news, the top headlines and business stories moving your world today. We begin in New York, where three congressional candidates backed by New York City Mayor Zoran Mamdani have prevailed in primary races over more mainstream Democratic opponents. And in a sign of the powerful anti incumbent wave playing out this year, 32 year old community organizer and Democratic Socialist Darielisa Avila Chevalier defeated Representative Adriano Espiont, the chairman of the Hispanic Congressional Caucus, despite him making history just a decade ago by becoming the first formerly undocumented immigrant to be elected to Congress. Avila Chevalier used her victory speech last night, heard here courtesy of Spectrum News, cast him as out of touch, doing

[Darielisa Avila Chevalier]

nothing about the affordability crisis and looking the other way while the real estate corporations that funded his campaign raised our rents and priced us out of the community that we love.

[Luke Varkas]

In a fourth closely watched House primary, Assemblyman Micah Lasher defeated a crowded field that included Jack Schlossberg, a grandson of President John F. Kennedy. And in South Carolina, Allen Wilson coasted to victory in a Republican primary runoff to be the state's next governor. Early President Trump had initially backed Wilson's opponent, but hedged his bets in the waning days of the campaign and endorsed both candidates. Back in Washington, Congress has passed its most ambitious housing legislation since the 1980s, aiming to ease federal regulations and boost home construction. President Trump is expected to sign the bill into law as soon as today. However, developers are responding with a shrug, noting that the bipartisan package lacks new funding and cannot alter the local zoning laws that block development. And for more on the housing bill, check out the latest episode of youf Money Briefing, where Journal reporters Rebecca Pichotto and Paul Kiernan join what's News host Alex Osola to explain what the bill means for Americans. We've left a link to that in our show.

[Frederick Neumann]

Notes

[Luke Varkas]

Heading Overseas A heat wave that's descended over much of Europe this week is peaking today, leading to widespread school closures, travel disruptions and a surge in heat related deaths. London, Brussels and Frankfurt will see temps in the mid-90s today, while while Paris and Madrid are set to breach 100. And while those numbers may not faze US listeners, consider that nine in 10Americans have air conditioning, compared to roughly one in 20 Brits, something UN Secretary General Antonio Guterres noted during remarks at a Gothic event space in London yesterday.

[Antonio Guterres]

This city and far beyond are experiencing the hottest day of the year with higher temperatures to come. London isn't just calling, it's cooking. Around the world, climate disasters are becoming more frequent, more destructive and more costly.

[Luke Varkas]

Last year's European heat waves cost the continent an estimated 43 billion euros, and according to research from Allianz, the current trajectory of intensifying heat waves could SAP European economies of between 5 and 7% of their GDP by the end of the decade. President Trump is criticizing oil companies for not lowering gasoline prices in line with a recent pullback in crude. Posting on Truth Social, the president said that customers are being gouged and that he's instructed the DOJ to immediately start looking into the situation. However, as markets editor Alex Frango says, the logic of the probe misses the reality of how gasoline prices work.

[Alex Frango]

What you put in your gas tank is not oil, it's gasoline. So it has to go from the oil well through a pipeline to a refinery. It has to get refined. It has to get in another pipeline and get to your gas station. So there's just a time element for the price to trickle through. The other thing is all the gas station owners, when the prices were going way up, their profit margins got squeezed massively and then they had to go out and buy much more expensive gasoline. They're sitting on that inventory. They're eating through it. They're not going to lower prices while they're still selling the gas that they paid higher prices for. So that's why it takes time for the prices to drop. But you know, we've been through this many, many, many times and politicians are often very frustrated at the way the market works. But the market does work, and the lower prices you see that get quoted on the news every evening. They will eventually get to the gas pump.

[Luke Varkas]

And as Alex explained, while the Strait of Hormuz may have reopened, it'll take time for tankers and their cargoes to get through the waterway.

[Alex Frango]

What's happening on the ground is ships are starting to move, but it's slow, it's not uncorking, and a massive parade of ships. It's more of a trickle or a faster trickle now than a few weeks ago, but it'll take time. The main shipping channel is still there are concerns about there being mines there. So authorities are trying to get ships through much narrower channels. And so there just, there isn't the capacity to get the, you know, hundred ships a day that we're going in and out of there. We're still in the tens of ships. So that that also will mean that it'll take longer for the global oil markets to fully adjust and get back to, you know, where they were before the war.

[Luke Varkas]

The International Maritime Organization said yesterday it would begin evacuating the over 11,000 seafarers still stranded in and around the Strait of Hormuz, though it didn't set a timeline for the mission. Chinese e commerce giant Alibaba has filed a lawsuit against the U.S. department of Defense in a bid to get its name struck off the Pentagon's list of blacklisted companies. Earlier this month, the Pentagon added about two dozen companies to its list of Chinese businesses, etc. Aiding China's military, including Alibaba and Baidu, limiting their ability to operate in the U.S. alibaba has denied any links to the Chinese military, while the Pentagon said it doesn't comment on ongoing litigation. And we're exclusively reporting that Tesla competitor Agility Robotics is set to go public in a deal that values the startup at about $2.5 billion. Agility's flagship humanoid robot is known as Digit, which can automate tasks including moving and stacking heavy containers. The company's products are used in some Amazon warehouses by the car parts maker Schaeffler and in Toyota manufacturing facilities in Canada. Agility is set to merge with dealmaker Michael Klein' purpose acquisition company, Churchill Capital. Coming up, with Asia still dealing with the economic fallout of the Iran war, we'll check in with HSBC's Chief Asia Economist about how hotter than usual weather could impact the region and the U.S. that's after the break.

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[Luke Varkas]

A new El Nino weather cycle is underway. The national oceanic and Atmospheric Administration made that announcement earlier this month, predicting that the Pacific warming pattern was likely to intensify this fall and had a more than 60% chance of becoming very strong. In the northern US that could mean a warmer than usual winter, while the southern US Sees stormier and wetter weather. But as HSBC chief Asia economist Frederick Neumann is here to discuss, those effects could pale in comparison to the impact felt in Asia later this year, where economic costs could exceed those seen during this year's energy price shock. Fred, unpack that conclusion for us that Asia essentially could be in for a double whammy here.

[Frederick Neumann]

Well, that's right. So the Iran war or the war that we saw in the Middle east that closed straight up for moose also meant that really there was a shortage of fertilizer. The Middle east is a big supplier of fertilizer, particularly to Asian economies. And so for several months now, fertilizer prices were very high or fertilizer was very hard for farmers to get their hands on. And what this means is that for the coming harvest season in the fall, we already had expected rising food prices because there wasn't just enough fertilizer to go around. Now that we have an extra layer of very volatile weather, high temperatures, drought, less lack of rain, for example, that's going to just exacerbate the stress on farmers on the agricultural sector. And therefore, yes, we have not just the El Nino weather pattern, but really the implications are being exacerbated by the effects of the water that we saw in the Middle east and the closure of the Strait of Hormuz.

[Luke Varkas]

And Fred, if you could just clarify for us where we would be expecting the sort of knock on effects of this agricultural slowdown to be most pronounced.

[Frederick Neumann]

So one key economy is India. India obviously has a population of 1.5 billion people. About 45% of the agricultural land is still being irrigated just by rainf. And that means if you have lack of rain, then you have drought conditions, plus you have very high temperatures. And that's not only important for India, but India is also an important exporter of rice, for example, of sugar, of many commodities. And so if there is agricultural stress in India, it not only pushes up food price in India, but even affects countries that are importing food from India, such as in Southeast Asia or even the Middle east itself, parts of Africa. So that radiates really out from. From India to other economies.

[Luke Varkas]

And that's, Fred, not a hypothetical risk that those exports could be drastically affected.

[Frederick Neumann]

It's not a hypothetical risk. We saw in the past that the Indian government restricted exports of certain goods just to keep prices domestically and supplies domestically ample. And this year already the Indian government actually put export restraints on sugar because they're worried about a lack of sugar domestically. And so they stopped exporting. The export ban lasts for another few months at least, and that already is then putting upward pressure on global sugar prices because India is an important supplier to the global market.

[Luke Varkas]

We obviously spoke about Asian energy supplies during the midpoint of the Iran war when we were seeing oil and gas supplies severely disrupted. And now it sounds like we're potentially looking at shocks to hydropower and the ripple effect of a potential lack of rain.

[Frederick Neumann]

That's right. So we're seeing, of course, declines in fossil fuel prices like oil and gas, because hopefully the Strait of Hormuz will remain open. But at the same time, weather patterns like El Nino can put stress on hydropower. And if you have an economy like Vietnam, for example, about a quarter of the electricity is generated by hydropower, that is, water that's kept behind dams, that kind of runs turbines. And if you have a lack of rainfall, then you have less hydropower generation. And therefore we have one energy crisis being replaced by potentially another energy crisis. One was just fossil fuel based, the other one is hydropower based, and that's all because of weather.

[Luke Varkas]

And finally, Fred, just some other things that jumped out to us about your report is one, that these impacts aren't just national or regional, but can be truly global. And two, that the macroeconomic impact of these El Nino events seems to be rising with each successive one of these cycles. Just tell us a bit more about the risks inherent in that.

[Frederick Neumann]

Well, the risk is that you're having these adverse weather events that puts stress on infrastructure, it leads to more volatile prices, and that ultimately reduces economic growth. It also means that we need to spend more money to protect ourselves, and that means less money for other types of investment. So overall, it really has risk of slowing down economic growth and raising prices at the same time, particularly for food, which is, of course, a necessity for millions and millions of people. The price of nickel, of copper could be impacted by this if you have lack of water for mining operations, for example. So the effects are multifold. In general, it just this forces, I think, governments to think harder about resilience, even though it's costly. You could argue that in the long term, that could make economies better off because it just strengthens the underlying infrastructure against any type of shock. But ultimately, in the short term, these events can be quite disruptive.

[Luke Varkas]

Frederick Neumann is HSBC's chief Asia economist. Fred, thank you so much for being with us on what's news.

[Frederick Neumann]

Thank you for having me.

[Luke Varkas]

And that's it for what's NEWS for this Wednesday morning. Today's show was produced by Daniel Bach and Hattie Moyer. 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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