WSJ What’s News: Trump-Backed Spending Bill Fails in the House
Episode Release Date: December 20, 2024
Host: Luke Vargas, The Wall Street Journal

1. House Rejects Trump-Backed Spending Bill

In a pivotal development, the U.S. House of Representatives declined to pass a Trump-backed government spending bill, escalating the threat of a government shutdown mere hours before the deadline. The revised bill, introduced late Friday night, aimed to extend government funding for three months, allocating over $100 billion specifically for disaster relief and aid to farmers. However, it notably excluded several provisions, including new regulations on pharmacy benefit managers, 911 health care funding, and proposed to suspend the nation's borrowing limit for two years—key demands from former President Donald Trump.

Key Points:

• The bill fell short, failing to secure even a simple majority within the GOP-controlled chamber.
• A significant bipartisan effort was necessary to pass the bill through special fast track procedures, requiring a 2/3 majority, which the proposal did not achieve.
• Nearly all Democrats and 38 Republicans opposed the legislation, highlighting deep divisions within the party.

Notable Quote:

"Take this bill yesterday and congratulate yourself because it's shorter in pages but increases the debt by $5 trillion is asinine. And that's precisely what Republicans are doing. I am absolutely sickened by a party that campaigns on fiscal responsibility and has the temerity to go forward to the American people and say you think this is fiscally responsible."
— Rep. Chip Roy, Texas (02:01)

Speaker Attribution:

• Luke Vargas (Host): Provides the overview and context of the bill’s failure.
• Rep. Chip Roy: Criticizes the inclusion of debt ceiling language and the party’s fiscal responsibility claims.

2. Speaker and Leadership Reactions

Following the bill’s rejection, Democratic Senate Majority Leader Chuck Schumer welcomed the decision, advocating for a return to the previously derailed bipartisan funding agreement. Simultaneously, discussions emerged about a potential one-week funding extension to postpone a shutdown beyond Christmas, though such a move would require bipartisan support.

Notable Quote:

"It's unclear what the next steps for the bill will be."
— Luke Vargas (02:27)

3. Trump’s Tariff Threats Towards the European Union

In an assertive move, Donald Trump issued a warning to the European Union, threatening to impose tariffs unless the bloc increases its imports of American oil and gas. This stance underscores Trump's focus on addressing the U.S. trade imbalance with the EU. Despite the EU being the primary market for U.S. crude oil and liquefied natural gas, it continues to maintain a significant trade surplus, with exports to the U.S. exceeding imports by over $20 billion in October.

Notable Quote:

"Donald Trump is warning the European Union that it faces tariffs if it doesn't increase purchases of American oil and gas..."
— Luke Vargas (02:34)

Additional Insights:

• Omar Abdel Baki, WSJ Middle East Correspondent: Discussed U.S. diplomatic engagements in Syria, emphasizing the need for a non-sectarian governance process led by Syrians to maintain regional stability and counteract influences from hostile state actors like Iran and Russia.

Notable Quote:

"They are probably going to be discussing a list of expectations for how Syria should be governed in a non-sectarian way..."
— Omar Abdel Baki (03:45)

4. FDA Drug Shortage for Obesity and Diabetes Medications

The U.S. Food and Drug Administration (FDA) announced the termination of shortages for obesity and diabetes medications Zeppbound and Mounjaro, both manufactured by Eli Lilly. Consequently, companies that previously distributed generic versions of these drugs, including compounding pharmacies and telehealth firms like HIMS and RO, must cease their activities within the coming months. However, Wegovy and Ozempic, products from Eli Lilly’s competitor Novo Nordisk, remain on the FDA’s drug shortage list, with Novo Nordisk actively contesting their removal.

5. Market News and Financial Updates

• FedEx Spin-Off: Shares of FedEx surged in after-hours trading following the announcement of its plan to spin off its freight trucking division, which generated over $9 billion in revenue last fiscal year. The company aims to complete this carve-out within 18 months.

• Stock Futures and Government Shutdown Concerns: Stock futures are slightly declining as investors remain cautious about the impending government shutdown.

• Federal Reserve’s Inflation Gauge: The Federal Reserve’s preferred inflation indicator, the Personal Consumption Expenditures (PCE) index, is expected to rise by 0.2% month-over-month, consistent with October's figures.

6. Wealth Management Shifts: UBS Targets Mass Affluent Market

In a significant strategic pivot, UBS, a leading global bank renowned for managing the assets of ultra-high-net-worth individuals, is attempting to democratize its wealth management offerings. This move targets the "mass affluent" segment, which comprises approximately 35% of U.S. households and controls 27% of investable wealth. This shift aims to capture a broader customer base beyond the traditional high and ultra-high-net-worth clients, who account for 10% of households but hold 70% of wealth.

Discussion Highlights:

• John Cindreo, WSJ Columnist: Explores the challenges and potential profitability of UBS’s strategy to cater to the mass affluent market. He discusses industry definitions of wealth categories, noting that while the mass affluent segment is substantial, it lags behind the wealthy in terms of total wealth control.

Notable Quotes:

"The mass affluent cohort is large, about 35% of U.S. households, according to Equifax, it accounts for 27% of investable wealth."
— John Cindreo (07:45)

"Right. It's a very bifurcated market. On the one side, increasingly, so is all digital automated. On the other side, it's all human contact."
— Financial Expert (09:16)

Insights:

• UBS's initiative reflects a broader industry trend where traditional banks face competition from robo-advisors like Wealthfront and Betterment, which offer automated financial planning and tax optimization services at lower fees.
• The challenge for UBS lies in balancing automated services with personalized human advisory, ensuring profitability despite lower fee structures compared to traditional wealth management models.
• The potential market disruption poses risks, as consumer preferences may favor lower-cost, automated solutions over higher-fee, advisor-led services.

Conclusion by John Cindreo:

"But for regular consumers, the fact that banks, I guess, are trying harder to compete for our business is ultimately a good thing."
— John Cindreo (10:34)

Production Credits:
Today's show was produced by Kate Bullivant with supervising producer Christina Rocca.

Closing Remarks:
Luke Vargas wrapped up the episode by highlighting the ongoing efforts and challenges within the wealth management sector, emphasizing the benefits to consumers from increased competition and innovation.

Notable Quotes:

"Let's unify the entire wealth market. Let's grow there. It's a great market for them because wealth management does not have big capital requirements..."
— Financial Expert (10:47)

"John, fascinating stuff."
— John Cindreo (11:45)

"Thanks so much."
— Financial Expert (11:46)

"And that's it for what's news for Friday morning."
— Luke Vargas (11:47)

Upcoming Episodes: Stay tuned for next week’s episodes, including the What’s News in Markets wrap-up on Saturday and the What’s News Sunday deep dive for more in-depth analysis on global and political developments affecting the markets.

This summary provides an overview of the key discussions and insights from the December 20, 2024 episode of WSJ What’s News, ensuring listeners and non-listeners alike are informed of the critical events and analyses presented.