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- [00:01]
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Luke Vargas
The DOJ turns to a fraud law to target corporate DEI efforts Plus Lululemon's founder launches a proxy fight to shake up the struggling retailer's board. And facing new and evolving threats, Western militaries prepare to spend big on new defense technology.
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Matt Ince
We track and monitor incidents of suspected Russian hybrid warfare. And so these are acts of sabotage, subversion, provocations, disinformation, cyber attacks. And we've seen a significant, significant increase.
- [01:03]
Luke Vargas
It's Monday, December 29th. I'm Luke Vargas for the Wall Street Journal and this is what's news in your feed once a day over the holidays with top headlines and business stories moving the world. Today, We are exclusively reporting that Google and Verizon are among the targets of Justice Department investigations into DEI initiatives in the workplace. The civil probes are being carried out under the False Claims Act. While the law typically used in healthcare fraud cases, the DOJ contends that holding a federal contract while still considering diversity in hiring and promotions is in effect, fraud against the government. Google and Verizon declined to comment. People familiar with the investigations say the government is also looking at companies in the auto, pharmaceutical, defense and utilities industries. I asked the Journal's Lydia Wheeler how to interpret the new investigations.
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Lydia Wheeler
These civil probes are proceeding under the umbrella of an anti fraud law called the False Claims act, which has traditionally been used to go after contractors who basically like, bill the government for work that was never performed or inflate the cost of services rendered. And you know, attorneys I spoke with said that this is a novel use of the law and that the False Claims act has never been used in this way to advance a president's political agenda. The stakes are really high for businesses, so if a civil lawsuit is brought, the company be on the hook to not only pay back what they made from the government in this contract, but three times the amount so millions of dollars we're talking about here.
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Luke Vargas
The founder of Lululemon, Chip Wilson, is launching a proxy fight to remake the athletic clothing company's board before it chooses a new CEO. Wilson, Lululemon's second biggest shareholder, said today that he's nominated three director candidates Confirming an earlier report by the he said shareholders wouldn't trust a CEO picked by the current board as the athletic apparel retailer is in an identity crisis with sales stagnating in the US and competition rising from upstart brands. And Wilson isn't the only one pushing for change. Activist Elliott Investment Management has built a more than $1 billion stake in Lululemon and is pushing a CEO candidate, Ralph Lauren executive Jane Nielsen. It's copper's turn in the spotlight after silver and gold hit new price records in Friday trading. Copper futures on the London Metals Exchange are on pace to notch their own record today and are now up more than 40% this year. Journal Europe Business editor Alex Frangos told me that both long and short term factors are driving the rise.
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Alex Frangos
Copper's had an incredible year. Part of that is the AI boom, which requires all these data centers, which require a lot of power, which requires a lot of copper because copper wire is so important to generating electricity and transmitting electricity. You then have possibility of tariffs coming into effect on copper, which would raise the price of copper coming into the US and then in general, when interest rates are being cut, as the Fed is doing, that tends to boost metals prices because investors see metals as more attractive. They're a bit of a hedge against inflation. I mean, it really is the year of metals. You look at gold and silver both had spectacular records and just surging into the end of the year, people are riding these things higher and pushing them higher and higher.
- [04:42]
Luke Vargas
All right, Alex, so multiple metals closing out the year here on a high note. We've even had stories about people buying up silver coins to try and profit off of this rally, though it sounds like there's an effort underway to try to cool things down a bit.
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Alex Frangos
People are trying to cash in on the frenzy and the prices. They're, you know, taking in grandma's silver to the, you know, silver dealers. And at a market level where people trade these futures contracts, that's been going on as well. So today we have one of the biggest exchanges where contracts connected to gold and silver get traded. The CME raised margin requirements on traders, meaning how much money they have to put down in order to trade these contracts. The money's there in case someone doesn't deliver on one of their contracts. And they raised the requirement to keep the Exchan exchange safer and that's caused prices to reverse quite a bit. So it's a wild ride.
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Luke Vargas
Stocks are slipping in early US Trading. Big tech stocks including Oracle, Tesla and Nvidia are leading the early losses though indexes remain near all time highs among today's gainers is lululemon, up around 1%. At midday, President Trump is touting progress toward ending the Ukraine war after a weekend call with Russia's Vladimir Put meeting with Ukraine's Volodymyr Zelensky at Mar a Lago.
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Donald Trump
We had a terrific meeting. We discussed a lot of things. As you know, I had an excellent phone call with President Putin that lasted for over two hours. We discussed a lot of points and I do think we're getting a lot closer, maybe very close.
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Luke Vargas
Trump was light on specifics, though, and offered no signs of a breakthrough amid Russian objections to a ceasefire and its insistence that Ukraine cede certain occupied areas currently under Moscow's control. And today, Zelensky said differences remain over US Security guarantees meant to prevent Russia from attacking Ukraine again. He says Trump has offered 15 years of guarantees, which Kyiv wants at least doubled. China staged major military exercises around Taiwan today, describing them as a stern warning against those interfering in Chinese affairs. The drills follow this month's approval of billions of dollars in US Arms sales to the is. Beijing promised more drills tomorrow. And Thailand and Cambodia have agreed to a ceasefire to end three weeks of deadly clashes over their disputed border that flare up in fighting over the border and one earlier this year were the deadliest ever in the century old conflict. It's unclear from the text of Saturday's truce if it will permanently end fighting, given no mention of the withdrawal of troops. Coming up, we'll turn our focus from this year's military hotspots to the threats likely to dominate in 2026 and drive defense spending in the process. That's after the break.
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- [08:06]
Luke Vargas
Somewhere between war and peace.
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Host/Interviewer
That's how Germany's Chancellor Friedrich Merz described Europe's new reality in November when he said we are no longer at peace with Russia. Recently, China has also grown bolder in its approach to neighbors like Japan. And as if to highlight this new and more aggressive reality, the US now has a rebranding Department of War. All the while, fighting raged on in Ukraine and for much of the year in Gaza, battlefields that served as laboratories for military experimentation. And developments there are likely to continue in the year to come. Well, joining me now with more is Wall Street Journal defense industry reporter Alastair McDonald, as well as Matt Ince, strategic Intelligence manager at geopolitical and security intelligence firm Dragonfly, which like the Wall Street Journal, is part of Dow Jones. Matt, looking back at this past year, what is standing out in terms of either the emergent threats or just changes we've seen among the world's largest militaries that are likely to shape global stability next year and beyond?
- [09:09]
Matt Ince
The first thing I'd probably point to is the extent to which a growing number of global and regional powers are increasingly prepared to use hard power. I'd also mention hybrid warfare, and particularly within the European context, we track and monitor incidents of suspected Russian hybrid warfare. And so these are acts of sabotage, subversion, provocations, disinformation, cyber attacks. So last year we saw a six fold increase in the number of incidents recorded compared to the previous year. And as of October this year, we've seen the number of incidents recorded surpass that for the whole of last year.
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Host/Interviewer
And Alistair, the Ukraine war has been really a laboratory of military innovation.
- [09:48]
Alastair McDonald
Now indeed, Western military tech companies are literally desperate to give their products away to frontline units and then be able to say, of course, that they've been tested on the battlefield. The key tech being watched closely from around the world is obviously drone warfare, but that's in the air, land and sea electronic warfare, by which of course I mean things like signals jamming and spoofing and air defense. And clearly what Ukraine has shown from the start is the need for cheap mass produced drones. So it used to be that militaries had precision and expensive missiles and mass and cheaper artillery. What drones have drone is to give both precision and mass. And where you have cheap ways of attack, of course you need cheap ways to defend. Rather than using a PAC 3 missile to bring down a drone, you want to something a lot cheaper, which the Ukrainians have been quite good at perfecting.
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Host/Interviewer
Matt, the hybrid threats we're talking about, AI threats, cyber attacks, these tools are being used, as we saw here in the UK in the last year and elsewhere, to target everything from railways to retailers. So this is more than armies that are at risk.
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Matt Ince
No, that's right. And interestingly, NATO's chief of cyber operations came out recently and suggested that actually Russia may have actually supported or at least provided assistance to ransomware groups that have recently conducted attacks this year against British retailers. So Marks and Spencer's being a good example. AI in particular is enhancing the sophistication of cyber threat actors, both state and non state. And so whether it's through their ability to develop malware, conduct social engineering, or even to conduct and execute influence operations. Their ability to do so is just growing by orders of magnitude and that's going to continue into next year.
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Luke Vargas
Alistair, what do you see as far.
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Host/Interviewer
As weapons developments go, defense tech spending, at least I'm sure we can say is going to be high. Looking at Europe as an example, for instance.
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Alastair McDonald
Yeah, that's right. I mean Europe's set to spend $560 billion this year, which is an immense amount given how far it had fallen from the peak of the Cold War. In terms of predictions, where you guys were talking about AI there, I mean, I think that will continue to be developed. And for instance, in Ukraine they use AI for missiles and drones, so it's not susceptible to jamming. And I think for the Europeans, what they will very much need is better intelligence. Basically that's something that they fail massively on, that they're relying on the US So more satellites out there and more airplanes and then also long range missiles. This is something that Europe is not very good at, so they'll need that.
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Host/Interviewer
Quite the shopping list for the world's largest militaries going into 2026. I've been speaking today with Wall Street Journal defense industry reporter Alistair MacDonald and Dragonfly's strategic intelligence manager, Matt Ince. Alistair Matt, thank you both so much.
- [12:33]
Alastair McDonald
Thank you.
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Matt Ince
Thank you very much.
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Luke Vargas
And that's it for what's news. Today's show was produced by Pierre Biennium and Julie Chang with supervising producer Tali Arbell. And I'm Luke Vargas for the Wall Street Journal. Heads up. We'll be publishing just one show a day this week and we'll be back with a new one tomorrow.
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Lydia Wheeler
Thanks for listening.
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