Ukraine Gets OK to Use Long-Range Missiles Inside Russia

Summary

WSJ What’s News: Ukraine Gets OK to Use Long-Range Missiles Inside Russia
Release Date: November 18, 2024
Host: The Wall Street Journal

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1. Ukraine Receives U.S. Authorization to Use Long-Range Missiles in Russia

Overview:
In a significant development, President Biden has granted Ukraine permission to utilize Western-made long-range missiles to target positions within Russia. This authorization aims to address the ongoing imbalance in the conflict, where Russia has maintained a tactical advantage.

Key Points:

• Ukraine's request for enhanced military capability has been a topic of intense discussion, with hopes that it would tilt the scales in Ukraine’s favor.
• Dan Michels (Journal Brussels Bureau Chief) provided insights, suggesting that the decision may not substantially alter the war's trajectory.

Notable Quotes:

• Dan Michels [01:29]: “This is not a blank check for Ukraine to strike all over Russia.”
• President Zelensky [02:06]: “Moscow understands no language but that of force.”

Additional Insights:

• The authorization is specifically limited to the Kursk region in Russia, where thousands of North Korean troops are stationed.
• Biden's decision is perceived as a response to significant Russian advancements, but its limited scope may restrict its overall impact.
• Dan Michels [01:55]: “The decision is unlikely to be a game changer for Ukraine.”

2. European Acceptance of Peace Talks and Political Dynamics

Overview:
As Ukraine receives new military support, there is a simultaneous movement towards accepting peace talks, largely influenced by President Elect Trump’s advocacy for negotiations.

Key Points:

• European leaders are showing increasing openness to peace discussions, signaling a potential shift in strategy.
• Dan Michels [02:06]: Described European politicians' acceptance as a “degree of capitulation,” acknowledging the grim outlook for Ukraine amid relentless Russian attacks, particularly on Ukrainian infrastructure and energy sectors.
• German Chancellor Olaf Scholz's recent communication with Russian President Vladimir Putin marks a significant diplomatic engagement, albeit controversial.

Notable Quotes:

• Dan Michels [02:06]: “This had less to do with the Ukrainian battlefield than the upcoming elections in Germany.”

3. Contest for the U.S. Treasury Secretary Position Becomes Contentious

Overview:
The race to appoint the next U.S. Treasury Secretary under the Trump administration has intensified, with new candidates entering the fray amidst growing tensions.

Key Points:

• New entrants include Kevin Warsh and Mark Rowan, joining frontrunners Scott Besant and Howard Lutnick.
• Scott Besant and Howard Lutnick's prospects are currently uncertain, with Lutnick's campaign facing challenges despite support from influential figures like Elon Musk.

Notable Quotes:

• Luke Vargas [02:06]: “The contest to helm the U.S. Treasury Department... turns messy in recent days.”

4. Nomination of Chris Wright as Energy Secretary Sparks Industry Debate

Overview:
Donald Trump has nominated Chris Wright, CEO of Liberty Energy, as the new Energy Secretary. Wright is known for his role in the fracking revolution and represents a faction of the oil and gas industry skeptical of climate change science.

Key Points:

• Wright's nomination underscores the administration's commitment to fossil fuel interests, potentially at odds with the broader industry's push towards low-carbon initiatives.
• Telus Deimos [05:47]: Highlighted that large oil producers like ExxonMobil and Chevron are better positioned to handle regulatory shifts compared to smaller companies.

Notable Quotes:

• Telus Deimos [05:47]: “Historically oil and gas companies have performed quite well under Democrats...”

Industry Implications:

• The nomination may lead to stricter regulations that could disadvantage smaller companies while benefiting larger, more resourceful firms.
• Jin Ju Lee: Suggested that Trump’s promise to remove Biden-era drilling barriers might not align with the interests of major oil players who are already equipped to comply with regulations.

5. Spirit Airlines Files for Bankruptcy Amidst Financial Struggles

Overview:
Spirit Airlines has filed for Chapter 11 bankruptcy in New York, aiming to restructure its debts and continue operations following a blocked merger with JetBlue Airways.

Key Points:

• The airline's low-cost model has faced challenges from competitors offering similarly low prices, escalating labor costs, and mechanical issues affecting fleet reliability.

6. Warner Bros. Discovery Resolves NBA Contract Dispute

Overview:
Warner Bros. Discovery has settled its breach of contract lawsuit with the National Basketball Association (NBA), ensuring its partnership with the league continues for at least the next decade.

Key Points:

• While Warner Bros. Discovery will lose certain broadcasting rights, the settlement secures significant NBA content rights both domestically and internationally.
• This resolution averts ongoing legal battles and stabilizes the company's relationship with the NBA amidst new competing media deals.

7. Market Outlook: Anticipation of Nvidia Earnings and Retail Sector Performance

Overview:
The upcoming week in financial markets is poised to be eventful, with expectations surrounding Nvidia’s earnings report and the performance of major retailers providing critical insights into consumer behavior and broader economic trends.

Key Points:

• Nvidia's anticipated earnings, scheduled for Wednesday, are expected to influence market movements significantly, given the company's substantial valuation exceeding $3.5 trillion.
• Retail giants like Target, Walmart, and Lowe's are set to report earnings, offering a glimpse into consumer spending patterns and the impact of inflation and supply chain dynamics.
• Discussions are also centered around the broader S&P 500, with particular attention to how AI developments and potential policy changes post-election may affect various sectors.

Notable Quotes:

• Telus Deimos [08:36]: “I still think this is going to be the biggest thing to watch in the next few days.”
• Gungeon Banerjee [08:59]: “We’ve been talking about the magnificent seven tech stocks, but the 493, the rest of the S&P 500...”

Sector-Specific Insights:

• Retailers: Focus on discretionary spending and price strategies indicate consumer mood heading into the holiday season.

  • Target emphasizes “affordable joy” and has implemented numerous price rollbacks.
  • Walmart continues to maintain “everyday low prices,” leveraging supplier negotiations to manage input costs related to inflation and supply chain challenges.

• Impact of Tariffs and Policy Changes:

  • Companies like Stanley Black & Decker have reported significant financial impacts from expected tariff increases, highlighting the intricate relationship between policy decisions and corporate performance.
  • The potential for tariffs to either suppress competition or consolidate larger firms is a critical factor in evaluating future market conditions.

Quotes on Policy Impact:

• Gungeon Banerjee [11:23]: “Are tariffs going to slow some companies? Are they going to accelerate some?”

Conclusion: Preparing for a Dynamic Market Week

With a blend of geopolitical developments, high-stakes corporate maneuvers, and critical earnings reports on the horizon, the upcoming week promises to offer substantial material for investors and market watchers. The interplay between policy decisions, corporate strategies, and economic indicators will be pivotal in shaping market trajectories and investor sentiment.

Host Closing Remarks:

• Luke Vargas [12:34]: “Let's do this next Monday. What do you say?”
• The episode concludes with a teaser for the next installment, highlighting a conversation with Dominic Rizzo on AI investment and tech stocks.

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Produced by Kate Bullivant and Daniel Bach. Supervising Producer: Christina Rocca.

Transcript

[Dan Michels]

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[Luke Vargas]

President Biden lets Ukraine use long range missiles to strike Russia, but will that dramatically change the course of the war? Plus the contest to become the next US Treasury Secretary turns messy and we'll look at the week ahead in markets with the new hosts of WSJ's take on the week.

[Gungeon Banerjee]

We've been talking about the magnificent seven tech stocks, but the rest of the S&P 500 the conversation is going to start to shift to everyone else because the market really has questions about the AI story. And with the election, people are looking at what's going to happen with the 493.

[Luke Vargas]

It's Monday, November 18th. I'm Luke Vargas for the Wall Street Journal and here is the AM edition of what's the top headlines and business stor moving your world today. We begin in Ukraine where the government in Kyiv is now wielding a new power authorization from the US to use Western made weapons to strike targets inside Russia. Ukraine had pleaded for such permission for months amid what President Volodymyr Zelensky as well as his top aides said was an imbalance in the war that gave Russia the upper hand. However, Journal Brussels bureau chief Dan Michels told me the decision is unlikely to be a game changer for Ukraine.

[Dan Michels]

Now, with thousands of North Korean troops in the Kursk region of Russia that Ukraine occupies, the Biden administration apparently feels that the scales have tipped enough in Russia's favor that Washington wants to allow Ukraine to fight back, but apparently only in that limited region. This is not a blank check for Ukraine to strike all over Russia.

[Luke Vargas]

And Dan also told me that Biden's move comes as our Journal colleagues report that President Elect Trump's push for Russia Ukraine peace talks is finding growing acceptance in Europe, I guess you might call.

[Dan Michels]

It a degree of capitulation on the part of European politicians, a recognition that the situation and the outlook for Ukraine is not good. There have been massive Russian attacks, especially in recent days on Ukrainian infrastructure, energy infrastructure. German Chancellor Olaf Scholz last week spoke by phone with Russian President Vladimir Putin. This was the first direct contact between Putin and a Western leader in months, if not more than a year. Scholz drew a lot of criticism for this and there was a lot of analysis that in fact this had less to do with the Ukrainian battlefield than the upcoming elections in Germany, where Scholz may stand for reelection. And so it's emblematic of the kind of fighting we're seeing in European countries over how to proceed. Because the European economy is in bad shape, they are not in a position to open the tap on funding.

[Luke Vargas]

President Zelensky warned after the German chancellor's call with Putin that it risks opening a Pandora's box in that it could lead to further calls amounting to nothing. And he said that Moscow understands no language but that of force. The contest to helm the U.S. treasury Department and the future Trump administration is heating up, with two new names joining the fray after jostling for the job turned messy in recent days. Among those now being discussed by Trump's advisors are Kevin Warsh, an economic policy advisor to President George W. Bush who later served on the Fed's Board of Governors, and Mark Rowan, the chief executive of Apollo Global Management. Warsh, who's serving on Trump's transition team, didn't respond to requests for comment while Rowan previously affirmed interest in the job but we report isn't actively lobbying for it. The new entrants in the treasury competition come as longtime frontrunners Scott Besant and Howard Lutnick remain in contention. However, some people close to Trump say that Lutnick's chances had dimmed after an aggressive campaign for the job by him and his allies, including Elon Musk, kicked into high gear in recent days, Donald Trump has selected outspoken fossil fuel champion Chris Wright as his nominee for energy secretary. Wright, the CEO of Liberty Energy, has been at the center of the fracking revolution. His nomination elevates a branch of the oil and gas industry that is skeptical of climate change science and mostly hasn't pledged to build out low carbon energy businesses unlike giants ExxonMobil and Chevron. But while Wright's ascension culminates a push by so called oil wildcatters into Trump's political ran journal herd on the street columnist Jin Ju Lee said that the President Elect's promise to scrap Biden era barriers to drilling oil and gas may not be music to the ears of big oil.

[Telus Deimos]

The biggest oil producers actually have the means and the resources to comply with regulations. Smaller companies often don't. And that can work in big companies advantage. Stricter regulations can either eliminate competition by putting smaller companies out of business, or it can also force force smaller companies to sell to larger companies. What's interesting is that historically oil and gas companies have performed quite well under Democrats, and that's because they favor putting roadblocks on new supply that tends to limit producers capital spending and tends to boost oil prices. And those roadblocks tend to be more damaging to smaller companies, not the giants.

[Luke Vargas]

Spirit Airlines has filed for bankruptcy, hoping to restructure its debts to bondholders and live to fly another day. The Chapter 11 filing in New York comes after its merger with JetBlue Airways was blocked early this year. A pioneer of the ultra low discount model, Spirit has recently struggled to compete with major carriers who've increasingly offered low prices and has also been facing soaring labor costs and an engine problem that's kept dozens of its planes on the ground. And we are exclusively reporting that Warner Bros. Discovery has settled its breach of contract lawsuit against the National Basketball association, keeping it in business with the league for at least the next decade. While Warner is losing rights to regular and post season games for its TNT network after this season, the agreement, expected to be announced this week, gives it rights to a significant amount of NBA content domestically and abroad. It also avoids a continued legal battle that began in the summer when the NBA signed new rights deals with competitors including ESPN, NBCUniversal and Amazon.com coming up, the WSJ's take on the Week podcast is back and new hosts Gungeon Banerjee and Telus Deimos will join us with a taste of the investor insights and market analysis that they'll be serving up every Sunday to help us get ready for the week. That's after the break.

[Gungeon Banerjee]

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[Luke Vargas]

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[Gungeon Banerjee]

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[Luke Vargas]

Of America Corporation well, it is shaping up to be a busy week in markets ahead of earnings from chip maker Nvidia and results from a number of major retailers. That'll give us a window into consumer spending trends and if those items are also on your radar or you're just looking to get a leg up on the world of money and investing. Good news because the WSJ's take on the Week podcast is back with new hosts Tellus Demos and Gungeon Banerjee who joined me now to get ready to take on this week. Gungin, tell us. It's great to have you here. I'm so excited for this relaunch.

[Telus Deimos]

Thanks for having us.

[Luke Vargas]

Thank you Gungan. I know you're not alone in watching Nvidia closely. This company has now got a massive valuation exceeding $3.5 trillion. So when they report earnings on Wednesday after the closing bell, heads will turn, markets will move. What is the big storyline to be keeping an eye on here?

[Telus Deimos]

Yeah, it's so interesting. The past few weeks a lot of investors have really been focused on the US Election and AI has taken a bit of a backseat. But in coming days, that's going to shift. Last earnings season, this really became like the financial markets super bowl, the thing that every single person I was talking to was focused on. Some of that excitement has died down, but I still think this is going to be the biggest thing to watch in the next few days.

[Gungeon Banerjee]

Well, but like the super bowl, some people like to watch for not for the game itself, but for the ads. And I think here the ads are the we've been talking about the magnificent seven tech stocks, but the 493, the rest of the S&P 500 because the market really has questions about the AI story. And with the election, people are looking at what's going to happen with the 493. Are tariffs going to slow some companies? Are they going to accelerate some? What could tax cuts do? What could Trump's regulatory policy do? I think we're going to be talking much more about the other stuff. That's what I think the 2025 conversation will be like.

[Telus Deimos]

But that being said, even though you're totally right, people are going to be focusing on all these other companies. What you're seeing in the market is people continue to price in these giant swings in Nvidia stock right after its earnings. I was taking a look at pricing data in stocks options. People are betting on a 12% move on Thursday after it reports earnings. That's a crazy move for a $3 trillion company.

[Luke Vargas]

Something that may come into focus midweek. Another thing you guys discussed on the latest episode of the podcast are some other companies whose fortunes are likely to be very affected by the broader market. Retailers, Target, Walmart, Lowe's among those reporting earnings in the next few. Tell us, I know you've been keeping track of the outlook for these guys. What are we listening for most?

[Gungeon Banerjee]

Keenly, what we're listening for is our people in a discretionary spending mood. Both Target and Walmart have over the years obviously added a lot of discretionary the stuff you don't exactly need purchases to their business. Target talks about affordable joy. What's also been really interesting about them, inflation, obviously. Top of mind in the election, something we're all still paying attention to. Those two stores have been cutting prices on a lot of things. Target has announced thousands of rollbacks. Walmart, obviously a bedrock of their businesses, everyday low prices. And they've been continuing to achieve that by using their leverage to tell their suppliers, you got to lower the price on this for us. And so what does that say about the inputs into inflation, like supply chain issues that we know have played a role aside from economic growth and other things. So those companies will give us a little bit of a read on inflation, but really I think on just the consumer's mood and how they're feeling going into the holidays.

[Luke Vargas]

And maybe this is premature, but is it possible the longer term forecasts for these retailers might hint at what they're expecting, for instance, their margins to look like in a higher tariff environment?

[Telus Deimos]

So we saw corporate executives mention the US Election at an insane pace this earnings season. So I think that's one really big thing to watch in the next few weeks and months. One thing investors have been cautioning me is that it really is way too soon to pick some of those winners and losers because so much could change in terms of Trump's priorities and policies in coming months.

[Gungeon Banerjee]

I mean, one name that has emerged as a bit of a bellwether on this just because they're a familiar name and they've been making very serious pronouncements. Stanley, Black and Decker. They put out a securities filing. My colleague John Weill here in New York wrote about this. They said the toolmaker believes that the Trump administration's expected tariff increases could result in an annualized $200 million pre tax hit to operating income. That's a big number. And so regardless of whether you think that overall tariffs are good or bad policy for the U.S. there are certainly going to be companies that it is a major factor in their business. Maybe it hits their margin, maybe it affects sales, maybe they pass those prices along to people. And companies did do that the last time around. So we'll see if that plays any role in future inflation. I mean, the Federal Reserve is not ready to declare total victories over inflation and they probably have things like this on their mind.

[Luke Vargas]

Tell us, Gungan, you've set us up really nicely for the week ahead. Thank you both so much. Let's do this next Monday. What do you say?

[Gungeon Banerjee]

Sounds great.

[Telus Deimos]

Thank you.

[Luke Vargas]

And for much more, the first episode of Take on the Week is out now and includes a fascinating conversation with Dominic Rizzo, a tech portfolio manager at T. Rowe Price, about AI investment and tech stocks. And you can check it out wherever you get your podcasts. And that's it for what's news for Monday morning. Today's show was produced by Kate Bullivant and Daniel Bach. Supervising producer, Christina Rocca. And I'm Luke Vargas for the Wall Street Journal. We'll be back tonight with a brand new show. Until then, thanks for listening.