Caitlin McCabe (3:01)

Chelsea says it's relatively unusual for private banks to be involved in a deal with a country facing so much financial distress, which is why the banks are wanting gu from the Treasury Department on what kind of backstop is available to them.

Chelsea Delaney (3:14)

So the banks are looking for potentially a couple things. One is collateral. So in the past in loans like this, you know, a country could pledge something like oil export revenues. They could pledge, you know, a stake and a state owned company. Just something that if they end up not being able to pay back the loan, then they can go and try and seize some of that asset or some of those revenues. They also are looking at potentially having the Treasury Department pledge to back the loan as well. So again, if Argentina is unable to pay back that loan, then the Treasury Department would come in and make them good.

Caitlin McCabe (3:46)

A Treasury spokesman said discussions regarding the deal remain ongoing. Going now to Japan, where the country's first female prime minister, Sanae Takaichi, was confirmed in a parliamentary vote today, giving the nation a new leader who advocates close ties with the US And a stronger Japanese military.

Jason Douglas (4:08)

Takeichi is a hardline conservative from the ruling ldp.

Caitlin McCabe (4:12)

That's the Journal's Tokyo bureau chief, Jason Douglas.

Jason Douglas (4:15)

She's a Japanese nationalist. She was a close ally of the late Shinzo Abe, who was a great friend of President Trump. She is someone who believes very strongly in fiscal expansionism and very expansionary monetary policies to get Japan motoring again. She's a hawk on China. She has something of an ideological affinity with Trump. So one of the things people are watching closely in Tokyo is how well she will get on with the US.

Caitlin McCabe (4:37)

President Takaichi's election as prime minister comes days ahead of a possible visit to Japan by President Trump, as he is expected to depart for Asia at the end of the week. Tokyo hopes similar ideologies between both leaders will help heal ties that have been strained by Trump's push to reorder global trade. Meanwhile, Russia and Ukraine signaled yesterday that they remain far apart on a peace deal, even as President Trump turns his attention to the conflict after securing a ceasefire in the Middle East.

Donald Trump (5:07)

They could still win it. I don't think they will, but they could still win it. I never said they would win it. I said they could win. Anything can happen. You know, war is a very strange thing.

Caitlin McCabe (5:16)

President Trump speaking there yesterday about Ukraine's prospects of winning the war following what officials have described as a tense meeting between Trump and Ukrainian President Volodymyr Zelensky. Last week, officials from Ukraine, Europe and the U.S. told the Journal that Trump at times expressed frustration in his meeting with Zelensky and that he told the Ukrainian leader that he was eager to reach a quick settlement settlement on the war, regardless of the region's fate. According to officials, Trump said it wasn't a priority to return the Donbass region to Ukraine, noting that Russia already holds much of the territory. Ukrainian and European officials consider such a concession unacceptable. Russian President Vladimir Putin and Trump are expected to meet in Budapest for talks to end the war at a date that is yet to be announced. Coming up, as Europe faces an increasing threat from drones, a look at these startups racing to develop cheap, reliable systems to counter them. That story and more after the break.

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Caitlin McCabe (6:53)

A new technology arms race is underway across the world. Startups from Silicon Valley to Europe are rushing to develop cheap, reliable, reliable systems to counter hostile drones. In recent months, drones are increasingly showing up over airports, cities and military bases far from the battlefield in Ukraine, worrying local governments and causing significant disruptions to airspace. But intercepting these drones is hard, says the Journal's Brussels bureau chief Dan Michaels, spurring many developers of the technology to get creative. Dan, how urgent has the need for this technology become?

Dan Michaels (7:32)

This is very urgent because unlike some security concerns that are in the future or potential, this is happening now. Drones, as you say, are showing up over cities, military bases, airports across Western Europe, not just along the front line. We saw Russian drones going into Polish airspace and crashing. There have been drones in Munich, over a military base, in Copenhagen, over the airport. So it is a clear and present danger.

Caitlin McCabe (8:04)

Got it. So clearly a very pressing need for this. But how easy is it to actually intercept these drones?

Dan Michaels (8:11)

That's the issue here. It's not at all easy. Listeners may be familiar with the Patriot anti missile system, which is by all accounts a very impressive system, but that's designed to hit missiles that are following a steady linear path. One difference with drones, aside from there being much smaller, is is that they can zig and zag and stop and start Again, more like a tiny helicopter than a rocket. And even the best computer, which might be able to track a missile in flight, isn't going to know what a drone is going to do three seconds later. So there are a lot of very complicated technical challenges involved in just locating the drones to try to knock them out of the sky.

Caitlin McCabe (8:58)

And so, Dan, can you walk us through some of the tech that's been developed so far?

Dan Michaels (9:03)

Like with so many other situations, defense planners and engineers are trying to develop layers of systems to stop drones. The first thing you want to do is spot them far away and hit them as far away as possible. And for that, something kind of like a very small missile is generally what is being developed. Or some kind of longer range drone that itself hunts down and destroys another drone. Another type of system is like a small surface to air missile that has been used for decades in the military, which goes up in the sky and then explodes near its target, kind of like a grenade. One of the things that people designing counter drone systems have to figure in is collateral damage, because even if you can knock a drone out of the sky, you may destroy something on the ground when both the drone and the counter drone system come crashing down. So one system that a colleague of mine saw tested shoots a net to grab a drone and then land with it. The problem is for that system, you have to know exactly where the target is. You have to be able to get close to it. So these are very complicated problems.

Caitlin McCabe (10:16)

And Dan, you have this really interesting story out about this. You make the point that NATO militaries are taking lessons from Ukraine on this, which has really been forced to innovate anti drone technology after years of war with Russia.

Dan Michaels (10:29)

Indeed, no one at this point knows more about detecting and countering drones than Ukraine because they've faced many thousands of Russian drones. And NATO countries are helping Ukraine defend itself. And one of the things they're getting in return is a lot of knowledge from Ukraine about what works and how quickly they need to adapt. NATO has set up an office in Poland to focus on learning from Ukraine. And some of the Ukraine Ukrainian drone and counter drone startups are working with Western European countries. Britain just recently announced that they're going to start making Ukrainian counter drone interceptors at a factory in England that will be shipped to Ukraine. And the British military learns from this. So this is becoming a two way street on defense technology as the dangers that Ukraine has faced for a while are now spreading to the West.

Caitlin McCabe (11:26)

That's the Journal's Brussels bureau chief, Dan Michaels. Dan, thanks so much for joining us.

Dan Michaels (11:30)

Good to talk with you. Thanks.

Caitlin McCabe (11:37)

And while the tech and defense sectors may be enjoying strong sales, the outlook is less rosy for high end brands like Louis Vuitton, Chloe and Gucci. Sales of new luxury goods are in a slump at the moment and hurt on the Street. Columnist Carol Ryan says brands really need to win back young and middle class shoppers in particular. But that might not be so easy.

Carol Ryan (12:01)

The problem is a lot of these shoppers have gone over to secondhand now. And last year there was around $55 billion worth of secondhand luxury goods sold. And the market, it's growing at about 10% a year now. It's partly because it's become so easy to buy and sell used luxury on big specialist resale websites like the RealReal, Fashionphile and Vestier Collective. And people are really in the mood for bargains at the moment. They feel cautious about the job market. Luxury brands also raised their prices too much during the pandemic. So shoppers are heading to second market and they're finding the goods they want at a 10, 20 or 30% discount to the prices in brand stores.

Caitlin McCabe (12:35)

And as Carol explains, Gen Z and Millennial shoppers spent about $8 billion less on new luxury goods than they did in 2023, creating a real dent in income for brands. But there are ways to get them back.

Carol Ryan (12:49)

The data in the resale market can also be goldust for the luxury brands. And they're getting a bit smart about using the information from resale websites to boost their own sales. For example, if they see one of their old handbag is becoming really popular again on resale websites, being traded quite heavily, they can reissue it to cash in on the buzz. And we've already seen this happen this year with the Chloe Paddington bag and the Balenciaga City bag.

Caitlin McCabe (13:14)

And that's it for what's news for this Tuesday morning. Today's show is produced by Daniel Bach. Our supervising producer is Sandra Kilhoff. And I'm Caitlin McCabe for the Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for listening.

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