Loading summary
Transcript17 lines
- [00:04]
Alex Osola
A decade after an infamous merger, Kraft Heinz eyes a breakup. Plus, the Trump administration's quietest tool for boosting economic growth might be its most powerful.
- [00:14]
Greg IP
Where deregulation really has an effect is where gets out of the way of innovators and investors doing something for which there is some demand. But that demand and that supply were not allowed to meet the because there was a rule in the way and.
- [00:28]
Alex Osola
Why Ford has recorded more safety recalls this year than any automaker ever. It's Friday, July 11th. I'm Alex Osola for the Wall Street Journal. This is the PM edition of what's news, the top headlines and business stories that move the world today. We begin this evening with some big moves in the business world. We're exclusively reporting that Kraft Heinz is preparing to break itself up a decade after a merger between two of the biggest names in packaged foods was orchestrated by Warren Buffett and Brazilian private equity firm 3G Capital Partners. According to people familiar with the matter, the company is planning to spin off a large chunk of its grocery business, including many craft products, into a new entity that could be valued at as much as $20 billion on its own. That would leave a company housing goods such as sauces and spreads like Heinz's namesake ketchup and Dijon mustard brand Grey Poupon. The company has given priority to its faster growing offerings like hot sauces, dressings and condiments. The hope would be that the two separate units would be in total worth more than Kraft Heinz's roughly $31 billion market value. The people said that the company is still working through the details, but that a split could be finalized in the coming weeks. A Kraft Heinz spokesperson said that the company has been evaluating potential strategic transactions as announced in May, and shareholders of Walgreens Boots alliance have voted in favor of Sycamore Partners nearly $10 billion acquisition at a special meeting. The deal, which was announced in March, would allow the New York private equity firm to take Walgreens private. The drugstore chain expects the transaction to close in the third or fourth quarter of this year. Defense Secretary Pete Hegseth has ordered the removal of any policies that slow down the development and deployment of drones. That's according to a memo sent yesterday and viewed by the Wall Street Journal. The memo builds upon executive orders signed by President Trump last month aimed at easing restrictions on US Made drones and strengthening an industry that has struggled to compete with Chinese competitors. The Department of Defense plans to boost what it called a nascent US Drone manufacturing base by approving hundreds of American made products for military purchase. Analysts note that the order is expected to deliver a lift to defense technology companies specializing in drones and unmanned aerial vehicles. Shares of defense companies like Kratos Defense and Security Solutions, Redcat Holdings, Unusual Machines and Xenatech climbed higher on the news. Foreign the defense company's performance was not enough to drag major US Indexes higher as President Trump's latest tariff threats have knocked stocks off yesterday's records. The Dow fell 279 points, or about 0.6%. The S&P 500 slipped about 0.3%, while the Nasdaq was down roughly 0.2%. Ford Motor has recorded more safety recalls in the first six months of 2025 than any car company ever has in an entire calendar year. Through the end of June, Ford issued 88 safety recalls, according to federal data. The next closest manufacturer this year has notched 21 recalls. Since 2020. Ford has either reported the first or second most recalls in the industry. Ryan Felton covers the automotive industry for the Journal and joins me now. Ryan, what is going on? Why is Ford issuing so many recalls?
- [04:01]
Ryan Felton
Ford a few years ago under CEO Jim Farley, staked out fixing quality as a key priority, catching things more proactively, more aggressively. Nhtsa, which is the top auto safety regulator in Ford, reached a consent agreement last year and it basically said that Ford needed to go back and look and see if it did recalls, right? Basically more or less did they need to expand them. And legally if you find a safety defect, you gotta report it. What stands out is just the sheer volume of them.
- [04:35]
Alex Osola
What is Ford doing to try to decrease the number of issues that it by its own internal systems, as you say, has identified?
- [04:43]
Ryan Felton
Ford said they hired a lot more people with the kind of technical expertise to figure out and identify problems early on. When a company launches a model, it's known as a time where problems may arise. And in theory, their point of view is when you start catching more stuff initially, eventually that'll correspond to a smaller number of reportable defects that require a recall later on. They say they're seeing improvements on internally at the start of launch and there's some studies that are looking at quality, seems to be backing it up. But still you're seeing the result at this point, higher defect numbers. But they say that over time that number should begin to decline as a result of these newer processes that they've implemented.
- [05:26]
Alex Osola
And despite that high sort of top line number of recalls, Ford is not the only automotive company that has had a lot of recalls over the past decade, right?
- [05:37]
Ryan Felton
Yeah, a decade ago, GM had on a full year something like 75, 80 recalls. Stellantis in the past couple of years, they had a year where they had over 70 recalls. And overall, the industry in the past decade, there are more recalls overall. That's for a couple of reasons. In the mid2010, there was a couple of big scandals involving automotive defects, involving an airbag supplier that supplied faulty airbags to many automakers. That added more scrutiny to the industry overall and started to see some changes that led to more and more voluntary recall reporting. And also NHTSA has had beefed up staff in recent years to investigate defects and catch stuff. And overall, the industry's been reporting more in response to a heavier enforcement activity by the regulator.
- [06:29]
Alex Osola
That was Wall Street Journal reporter Ryan Felton. Thanks so much, Ryan.
- [06:33]
Ryan Felton
Thank you.
- [06:34]
Alex Osola
Well, some regulation may be heavily enforced, but the Trump administration is turning to deregulation as a tool to boost the economy more after the break. Among President Trump's efforts to boost the economy, there's an approach that has flown a bit under the radar. It's deregulation. And while it may not have gotten as much attention as tariffs or tax cuts, it may actually be more powerful. WSJ chief economics commentator Greg IP is here to tell us more. Greg, deregulation, is it just as simple as taking rules away?
- [07:17]
Greg IP
Essentially, every rule tries to constrain private activity because there's something else that it's trying to achieve. It's trying to make the environment cleaner or it's trying to reduce global warming, is trying to make cars or aircraft safer, that sort of thing. So with every rule, there's a cost and there's a benefit. And one of the questions presidents always have to ask is, are the costs worth the benefits? And President Trump has taken the view that a lot of rules that have been imposed in the past have costs that exceed their benefits. And that's a somewhat subjective choice. But it does seem likely that if you take a hard look at a lot of the rules that sort of persist and there's a lot of them, there are literally tens of thousands of them. Some of them are unnecessary. And if you carefully look at those rules and you get rid of them or at least dial them back, maybe you can encourage new private sector innovation and investment that makes us richer. And as I say in the column, this has an advantage over both tariffs and tax cuts. It doesn't take from one sector to give to another, which is what tariffs do. And it doesn't cost a lot of money and pump up the deficit in the future, which is what tax cuts do.
- [08:17]
Alex Osola
What is the Trump administration doing in terms of trying to weigh those costs and benefits in deregulating?
- [08:23]
Greg IP
In many cases, what you've had is that there is something called the Congressional Review Act. And under this statute, Congress can actually look back at a rule that the last president implemented and then just roll it back. But as I say in the column, cost benefit analysis is not a very satisfying way of actually determining what a rule does. For example, one of the rules that Trump wants to water down has to do with companies finding out who their owners are, like, who are your stockholders and figuring out whether any of them are using you to launder money. And this rule was said to cost $83 billion. Now, it's not that a lot of people are going out there and writing checks for $83 billion to comply with the rule. No, it's that they are putting people to work to comply with the rule. And the rule writers estimated that that time was worth $83 billion. So rolling back the rule doesn't actually add $83 billion to GDP. By the same token, the benefits that accrue to that rule, in this case presumably less crime, were extremely hard to measure. I mean, how do you measure, like, fewer people? Awfully hard. What I like to think, though, is that where deregulation or smart rulemaking really has an effect is where basically gets out of the way of innovators and investors doing something for which there is some demand. But that demand and that supply were not allowed to meet because there was a rule in the way.
- [09:47]
Alex Osola
That was. WSJ chief economics commentator Greg ip. Thanks so much, Greg.
- [09:51]
Greg IP
Thank you very much for having me.
- [09:59]
Alex Osola
And to feed their artificial intelligence models, tech companies have used a long standing practice called scraping to gather data from across the web. Publishers are not happy about it and they're looking for ways to protect their data. WSJ Media reporter Isabella Simonetti said that some have turned to the legal system and have forged licensing deals. Others are using new tools that block access to their material in the hope that this will force AI companies to the negotiating table. AI isn't going anywhere. It impacts all of our lives. And we're even using it in newsrooms to make our work more efficient and better. And we're still in the very early stages of this. And these news organizations recognize that they need to cut deals in order to have a sustainable relationship going forward with the big tech companies. That being said, because of the ongoing litigation, the deal making environment is somewhat tense. A lot of people want to wait and see how that plays out in order to come back to the bargaining table. News organizations are in touch with these companies about potential deals, but whether or not they actually get done and the nature of them is still something that is being sorted out. To hear more from Izabella, listen to today's episode of Tech News Briefing. And that's what's news for this week. Tomorrow you can look out for our weekly markets wrap up. What's news in markets? Then on Sunday, we're looking at online brokerage Robinhood's tokenization of a range of assets and discussing how far a friendly regulatory environment can carry the industry. That's in what's New Sunday? And we'll be back with our regular show on Monday morning. Today's show is produced by Pierre Biennime with supervising producer Michael Cosmides. Michael Lavalle wrote our theme music. Aisha El Musleam is our development producer. Scott Salloway and Chris Inslee are our deputy editors. And Falana Patterson is the Wall Street Journal's head of news audio. I'm Alex Osola. Thanks for listening.