Republicans Win Full Control of Washington

Summary

Summary of WSJ "What’s News" Podcast Episode: "Republicans Win Full Control of Washington"

Date: November 14th Host: Luke Vargas

The latest episode of The Wall Street Journal’s “What’s News” podcast, hosted by Luke Vargas, delves into the significant political shift as Republicans secure full control of the U.S. House of Representatives. Alongside this major political development, the episode explores advancements in technology with Nvidia’s new robotics initiatives and examines the pharmaceutical industry's strategic moves to expand the market for anti-obesity drugs.

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1. Republicans Secure Majority in the House

Victory and Implications Republicans have formally clinched control of the U.S. House of Representatives, achieving the necessary 218 seats following a pivotal GOP win in Arizona (00:52). This milestone solidifies their majority in Washington, setting the stage for a fully Republican-controlled government in the upcoming year. However, the margin remains slim due to several races still undecided, leaving the exact majority size uncertain.

Treasury Secretary Race A significant development within the Republican victory is billionaire Howard Lutnick’s bid for the Treasury Secretary position. According to the transcript, Lutnick, CEO of Cantor Fitzgerald, is actively seeking the role, leveraging his position as co-chair of President-elect Donald Trump’s transition team. This move comes amidst growing skepticism around Scott Besant, currently viewed as the frontrunner, particularly concerning Besant’s previous associations with billionaire investor George Soros (01:03). Lutnick’s direct approach to Trump's inner circle has introduced uncertainty into the selection process, with insiders describing the competition as a "toss up" (02:00).

Impact on Media Industry With control of the House, media executives are assessing potential regulatory shifts that could affect pending mergers and acquisitions within the industry. Notable deals include Skydance Media’s merger with Paramount Global and the satellite broadcaster consolidation between DirecTV and Dish Journal. Media reporter Joe Flynt offers insights into the industry's outlook under a Republican majority:

“Some in the media industry are anticipating a friendlier approach to business and mergers and acquisitions.” – Joe Flynt (03:03)

Flynt highlights optimism among media leaders like Warner Brothers Discovery’s CEO David Zaslav and Nexstar Media’s CEO Perry Sook, who hope for relaxed FCC regulations and a more accommodating stance from the Justice Department and Federal Trade Commission compared to the previous administration. However, concerns persist due to President Trump’s contentious relationships with several media companies, potentially leading to unpredictable regulatory actions:

“It remains to be seen whether a Trump administration will be really friendly to mergers and acquisitions for media or a complete wild card that will be very unpredictable.” – Joe Flynt (03:58)

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2. Nvidia’s Strategic Move into Robotics

Launch of New Computing Platforms Nvidia is venturing into the robotics sector by announcing the upcoming launch of a new line of computers designed to power humanoid robots. Scheduled for release in the first half of next year, this initiative positions Nvidia not as a robot manufacturer but as a technology provider, similar to how Google supplies the Android platform to phone manufacturers (04:23). On an August earnings call, CEO Jensen Huang emphasized the role of Nvidia’s Omniverse cloud platform in unlocking new client opportunities through its advanced AI capabilities:

“We are now able to work with just about every robotics company now to start thinking about building general robotics and so you can see that there are just so many different directions that generative AI is going.” – Nvidia VP of Robotics (05:31)

Global Robotics Landscape While Nvidia aims to stake a claim in the burgeoning robotics market, widespread deployment of humanoid robots remains unlikely by 2025. Nevertheless, significant progress is being made, particularly in China, where aggressive advancements in robotics are being driven to address labor shortages and other market demands (05:46).

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3. AI and Data Center Expansion Across Industries

Several major companies are capitalizing on the AI boom and the growing demand for data center infrastructure:

• Foxconn: The world’s largest contract electronics manufacturer reported better-than-expected Q3 profits, attributing success to increased demand for servers driven by AI advancements. Foxconn’s cloud and networking division, its second-largest revenue source after consumer electronics, has been a key beneficiary (05:46).

• ASML: The semiconductor equipment maker confirmed its long-term growth targets, forecasting annual sales to surpass $60 billion by 2030, fueled by AI-driven demand for more powerful semiconductors. This optimistic outlook has positively impacted ASML’s Amsterdam-listed shares, which rose over 4% (06:00).

• Siemens: German industrial giant Siemens exceeded market expectations with higher net profits in its fiscal fourth quarter, driven by robust demand for electrical infrastructure necessary for expanding data centers. As a result, Siemens’ shares surged more than 8% on the day (06:20).

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4. Pharmaceutical Companies Targeting Employers for Anti-Obesity Drug Coverage

Market Growth and Strategic Outreach The anti-obesity drug market is poised for significant expansion, with analysts predicting annual sales could exceed $100 billion. Leading pharmaceutical companies like Novo Nordisk and Eli Lilly report strong sales and are now adopting innovative strategies to capture this growing market. Novo Nordisk announced an almost 80% year-over-year increase in sales of its weight loss drug Wegovy for Q3, while Eli Lilly plans to enhance demand through new advertising campaigns (08:01).

Direct Engagement with HR Departments In a departure from traditional marketing approaches, these pharmaceutical firms are deploying field representatives directly to corporate HR departments. This strategy aims to address the gap in drug coverage, as many employer-sponsored health plans currently do not cover anti-obesity medications. According to pharmaceutical industry reporter Peter Loftus:

“A lot of private health insurance plans that are sponsored by employers do not cover these drugs. [...] pharmaceutical companies are sending field reps directly to companies and employers, to the HR departments, and they’re saying, we’d like to talk to you about the problem of obesity and here’s what our drugs can do.” – Peter Loftus (09:58)

Coverage Landscape and Challenges Coverage for these drugs remains limited, with only about half of large employers currently offering it, and even fewer among smaller companies (09:54). Pharma representatives are advocating for the long-term cost benefits of obesity treatment, positing that investing in these drugs can prevent more serious health issues and reduce future healthcare expenses:

“They’re trying to convince employers that it’s an investment that can pay off down the line [...] by reducing those downstream costs of treating complications.” – Peter Loftus (10:21)

Despite these arguments, employers face immediate cost increases, making the adoption of such drugs a challenging decision. Pharmaceutical companies are responding by making price concessions to make their offerings more attractive, although Loftus notes it remains an "uphill battle" to secure widespread coverage (11:20).

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Conclusion

The episode underscores a pivotal moment in U.S. politics with the Republican Party gaining full control of the House, potentially reshaping policy and regulatory landscapes across various industries. Concurrently, technological advancements and strategic market expansions highlight the dynamic interplay between politics, technology, and healthcare sectors. As these developments unfold, stakeholders across the board—from media executives to pharmaceutical companies—are adapting their strategies to navigate the evolving landscape.

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For more insights and detailed analyses, tune into future episodes of "What’s News" on The Wall Street Journal.

Transcript

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[Luke Vargas]

Republicans formally clinch the US House, solidifying their control of Washington come January. Plus Nvidia preps the launch of a new line of computers as it targets humanoid robot makers and why pharma reps are taking their pitch for anti obesity drugs to HR departments.

[Peter Loftus]

When it comes to large employers, there's surveys out there that suggest about half of them currently cover the drug, so that leaves a lot uncovered. And for smaller employers, the coverage rate is even lower.

[Luke Vargas]

It's Thursday, November 14th. 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 today. We begin on Capitol Hill, where Republicans have clinched control of the House more than a week after Election Day. The victory, sealed by a GOP win in Arizona, gives Republicans the 218 seats needed for a majority and means they'll full control of Washington next year. Their margin of control in the House is likely to be narrow, however, with a handful of races still uncalled as President elect Donald Trump continues to put together his cabinet. We report that billionaire Howard Lutnick, the chief executive of Cantor Fitzgerald, is making a late play for the role of treasury secretary, according to a person with knowledge of the conversations. Ludnick, who's working closely with Trump as his transition team co chair, has gone directly to the president elect about being appointed to the crude, crucial role of overseeing his economic agenda. His move comes as Trump advisors are signaling skepticism about investor Scott Besant, who's widely seen as the frontrunner for the job. In recent days, Besant has faced criticism over his past work with billionaire investor and philanthropist George Soros. The last minute jockeying has triggered uncertainty in the president elect's inner circle about who he'll choose, with people in his orbit calling the competition a toss up. A spokeswoman for Lutnick declined to comment, while representatives for the Trump transition and Besant didn't respond to requests for comment. Meanwhile, media executives are wrestling with what the Trump administration could mean for them as a handful of major deals await regulatory approval, including Skydance Media's merger with Paramount Global and the union of satellite broadcasting companies DirecTV and Dish Journal. Media reporter Joe Flynt told us what a blue sky scenario for the industry might look like.

[Joe Flynt]

Some in the media industry are anticipating a friendlier approach to business and mergers and acquisitions. The CEO of Warner Brothers Discovery, David Zaslav, said as much on an earnings call last week as did one of the biggest owners of local TV stations, nexstar Media chief executive Perry Sook. The hope is that FCC regulations that limit the number of TV stations a company can own might be relaxed, and also that the Justice Department and Federal Trade Commission would take a friendlier look at mergers and acquisitions than was the case during the Biden administration.

[Luke Vargas]

However, Joe said that Trump's disdain for a number of media companies he's sued Disney's ABC and anchor George Stephanopoulos for defamation and alleged Paramount's CBS misled the public with how it edited an interview with Vice President Kamala Harris has other execs worried about potential gray skies.

[Joe Flynt]

Trump has often taken issue with media companies. During his first term, his Justice Department attempted to block AT&T's acquisition of of WarnerMedia, and Trump's issues with CNN were seen as one of the motivators for that. So it remains to be seen whether a Trump administration will be really friendly to mergers and acquisitions for media or a complete wild card that will be very unpredictable.

[Luke Vargas]

Disney is set to report earnings before the bell this morning, and from market ripples to policy shifts that hit closer to home, what questions do you have about Trump's campaign promises, how they'll be implemented and what they could mean for you or your business to weigh in, send a voice memo to wnpodsj.com or leave us a voicemail with your name and location at 212-416-4328 and we just might use it on the show. Chip giant Nvidia is planning to roll out new computers to power humanoid robots within the first half of next year. Part of what a senior executive said was a bid to stake a claim in the fast growing robotics sector. Rather than compet directly in robot manufacturing as Tesla is doing, Nvidia is positioning itself as a tech provider akin to Google's supply of the Android platform to phone manufacturers. And on an earnings call in August, CEO Jensen Huang said the AI capabilities of the company's Omniverse cloud platform were opening doors to new clients.

[Peter Loftus]

We are now able to work with just about every robotics companies now to start thinking about start building general robotics and so you can see that there are just so many different directions that generative AI is going.

[Luke Vargas]

Nvidia's VP of robotics said today that while widespread deployment of humanoid robots is unlikely in 2025, a development push is underway, with China in particular making aggressive strides in robotics to address issues such as labor shortages and elsewhere in markets. It's been a busy day so far for a number of other companies hoping to profit off of AI and data center expans. Foxconn, the world's largest contract electronics maker known for assembling iPhones, reported better than expected Q3 profit as the AI boom drove demand for its servers. The company's cloud and networking business that houses them is its second biggest revenue source after consumer electronics. Asml, meanwhile, confirmed its long term growth target, betting that AI demand will drive orders for equipment that chipmakers need to make increasingly powerful semiconductors. The company is forecasting sales Sales could surpass $60 billion annually by 2030, and its Amsterdam listed shares are up more than 4%. And German industrial conglomerate Siemens beat market views with higher net profit in its fiscal fourth quarter, with the company benefiting from high demand for electrical infrastructure driven by data centers. Its shares jumped more than 8% today. Coming up to grow the already large market for anti obesity drugs, pharma reps are hitting the streets, literally, in a bid to nab FaceTime with HR departments. We'll look at the strategy behind their outreach to employers after the break.

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[Luke Vargas]

Last week, Novo Nordisk announced a nearly 80% year on year increase in sales of its blockbuster weight loss drug Wegovy for the third quarter. And competitor Eli Lilly also reported strong underlying demand for its popular diabetes and anti obesity drugs and said it would try to boost that with a new ad campaign. But to drive the next big growth phase for an anti obesity drug market that some analysts Predict could top $100 billion in annual sales, the Journal's Peter Loftus reports that Eli Lilly and Novo are deploying a boots on the ground strategy as a part of a push to speak to company HR departments. And Peter joins me now with the very latest. Peter, tell us, if you could, what you're learning here about this tactic that these pharma companies seem to be pursuing now.

[Peter Loftus]

Right. Well, it's an outgrowth of an unusual dynamic for coverage of these drugs, and that is that a lot of private health insurance plans that are sponsored by employers do not cover these drugs. And the reason is employers are finding the cost just such a big burden for them because the drugs themselves cost over $1,000 a month. And the population of employers that could benefit from these drugs is very big. And so that adds up to big impacts on their healthcare budgets. And so pharmaceutical companies, they've been used to traditional marketing approaches like sending sales reps to doctors to persuade them to prescribe the drugs and also sending reps to insurance companies to say, could you cover these drugs? But those traditional efforts haven't really been enough to improve coverage of these weight loss drugs. And so the new sort of unconventional approach is that these companies are sending field reps directly to companies and employers, to the HR departments, and they're saying, we'd like to talk to you about the problem of obesity and here's what our drugs can do.

[Luke Vargas]

Peter, just quickly, what does the coverage landscape look like right now?

[Peter Loftus]

Well, when it comes to large employers, there's surveys out there that suggest about half of them currently cover the drug. So that leaves a lot uncovered. And for smaller employers, the coverage rate is even lower.

[Luke Vargas]

All right, so a real coverage opportunity, I guess, if you're at the drug companies here, seeing those numbers that you just laid out, what is the kind of cost benefit analysis that these pharma reps are putting to companies? What's the case? They're trying to make sure.

[Peter Loftus]

The case they're trying to make is that, yes, this might be a big upfront cost. However, they're trying to convince employers that it's an investment that can pay off down the line in the sense that by treating obesity, you may also be warding off other complications like heart disease or sleep apnea or other things that this class of drugs has shown a benefit for. And so by reducing those downstream complications, you would also be reducing downstream costs of treating those complications.

[Luke Vargas]

Is there any sort of research that's shown how those costs might go down for other treatments?

[Peter Loftus]

Well, it's the hope that that will play out, but I think it's early to actually show that that has happened yet. That's something that could happen in the future, and that's sort of the carrot that the pharma companies are dangling before.

[Luke Vargas]

The employers, whereas it's pretty clear that if a small company in particular adds these weight loss drugs to their company policy, we're talking about an immediate increase in costs.

[Peter Loftus]

Right. And that's the certainty. They know that in the first couple years they're going to see their healthcare budgets explode, whereas the prospect of seeing that moderate is a little farther off and maybe a little less certain.

[Luke Vargas]

So what then is the likelihood that this pays off? It sounds like there are some real challenges here specifically around price.

[Peter Loftus]

Well, I don't think that the pharma companies would be doing this if they didn't think they could make some headway. They do say that there has been progress, that employer coverage has been creeping up, maybe not at a fast rate as they would hope, but also another factor here is that they have also been making price concessions that could further entice employers to get on board. But it's going to be an uphill battle. I don't think they think they're going to convince everybody to do it tomorrow.

[Luke Vargas]

I've been speaking to Wall Street Journal pharmaceutical industry reporter Peter Loftus. Peter, thanks.

[Peter Loftus]

Thanks for having me.

[Luke Vargas]

And that's it for what's news for Thursday morning. Today's show was produced by Kate Bullivant and Daniel Bach with supervising producer Christina Rocca. And I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.