What Will Trump’s Team Do About His Conflicting Growth and Trade Agendas?

Summary

WSJ What’s News: Episode Summary Title: What Will Trump’s Team Do About His Conflicting Growth and Trade Agendas?
Host: Tracy Hunt
Release Date: November 21, 2024

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1. International Criminal Court Issues Arrest Warrants for Netanyahu and Others

Overview:
The International Criminal Court (ICC) has taken a significant step by issuing war crimes arrest warrants for Israeli Prime Minister Benjamin Netanyahu, former Defense Minister Yoav Gallant, and Hamas military leader Mohammed Daf Daef. This marks a pivotal moment in international relations and has sparked intense discussions about the implications for Israel and the broader geopolitical landscape.

Key Points:

• Charges Against Israeli Leaders:
  Omar Abdel Baki, Wall Street Journal’s Middle East correspondent, detailed the ICC’s allegations which include using starvation as a weapon of war by restricting humanitarian aid to the Gaza Strip (00:25-02:33). The ICC also accuses Netanyahu and Gallant of crimes against humanity, including the targeting of civilians.

• Israel’s Response:
  Netanyahu’s office vehemently rejected the ICC’s decision, labeling it as politically motivated and asserting that Israel will not back down until all its war objectives are met. Yoav Gallant condemned the ICC’s actions, arguing that equating Israel with Hamas is outrageous and expressed pride in his military leadership.

• Implications of the Warrants:
  Abdel Baki explained that under the Rome Statute, Netanyahu and Gallant are now restricted from traveling to over 120 countries adhering to the statute, risking arrest upon arrival (02:40). This isolation underscores the severity of the ICC’s decision, potentially hindering Israel’s international engagements.

Notable Quote:
Omar Abdel Baki stated, “This is one of the most consequential or monumental decisions that the ICC has made” (02:33), highlighting the unprecedented nature of these warrants compared to previous actions, such as those against Russian President Vladimir Putin.

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2. US Housing Market Shows Signs of Recovery

Overview:
Contrary to prior trends, sales of existing US homes saw an uptick in October, marking the first year-over-year gain in over three years. However, analysts caution that the market remains fragile with 2024 projections still indicating the lowest sales since 1995.

Key Points:

• Sales Increase:
  The National Association of Realtors reported a 3.4% rise in existing home sales in October, reaching a seasonally adjusted annual rate of 3.96 million (04:18).

• Factors Influencing the Market:
  WSJ reporter Nicole Fried explained that the October increase was partly due to lower mortgage rates in August and September, making homes more affordable and leading to backlogged deals from previous months (04:28).

• Current Market Challenges:
  Mortgage rates have since risen to around 7%, dampening the momentum. Additionally, the typical slowdown during the fall due to holiday preparations and colder weather further impacts sales activity (05:24).

Notable Quote:
Nicole Fried commented, “The increase in home sales in October reflected the fact that mortgage rates fell... And many are expecting that it could stay slow through the rest of the year” (04:28).

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3. US Markets Show Mixed Performance

Overview:
On the day of the episode, US financial markets closed with varied results. The Dow Jones Industrial Average saw a significant rise, while the S&P 500 and Nasdaq experienced more modest gains. Additionally, Bitcoin reached a new intraday peak, driven by optimism over potential crypto-friendly policies under the Trump administration.

Key Points:

• Market Indices Performance:
  • Dow Jones: Up over 1%
  • S&P 500: Up approximately 0.5%
  • Nasdaq: Incremental increase of less than 0.1%
• Cryptocurrency Surge:
  Bitcoin surpassed $99,000, continuing its bullish trend amid positive sentiment towards crypto regulation.

Notable Quote:
Tracy Hunt summarized, “Bitcoin hit a new intraday peak just above 99,000 today, continuing its wild rally on hopes of crypto-friendly policies from the Trump administration” (05:24).

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4. Matt Gaetz Withdraws Nomination for Attorney General

Overview:
Former Congressman Matt Gaetz has withdrawn his nomination for U.S. Attorney General, citing becoming a distraction. This development is a significant setback for President-elect Donald Trump’s administration and underscores the challenges of appointing unconventional cabinet members.

Key Points:

• Reasons for Withdrawal:
  Gaetz mentioned in a post on social media platform X that his confirmation process was turning into a distraction (05:24).

• Underlying Issues:
  Allegations of sexual misconduct and drug use have plagued Gaetz, leading to anticipated rejection from Republican lawmakers. Reports suggest serious claims, including an incident involving a minor at a party (06:38).

• Political Impact:
  Sadie Gurman, Justice Department reporter, emphasized that Gaetz’s withdrawal is a "huge political blow to Trump," highlighting the risks of rapid and unconventional cabinet appointments (06:38).

Notable Quote:
Sadie Gurman stated, “This is a huge political blow to Trump since his election... potentially backfiring” (06:38).

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5. Allegations Surface Against Defense Secretary Nominee Pete Hegseth

Overview:
Newly revealed details have emerged regarding a 2017 sexual assault allegation against Pete Hegseth, Trump's nominee for Defense Secretary. This development poses another potential hurdle for the Trump transition team amidst its flurry of cabinet appointments.

Key Points:

• Details of the Allegation:
  The Monterey City Police released a redacted report detailing a night involving excessive drinking, a poolside argument, and conflicting accounts of an incident in Hegseth's hotel room (07:15).

• Hegseth’s Response:
  Hegseth maintains that the encounter was consensual and fully cleared by investigations, affirming his commitment to the transition (07:15).

• Trump Team’s Stance:
  The Trump transition team continues to support Hegseth, asserting that the report supports his account of the incident (07:15).

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6. Trump’s Economic Agenda: Balancing Growth and Trade

Overview:
President-elect Donald Trump faces a strategic dilemma as his economic policies aimed at fostering growth through tax cuts and deregulation conflict with his objectives to reduce the trade deficit via tariffs. This tension poses challenges for his administration in harmonizing these two pivotal aspects of his agenda.

Key Points:

• Two Main Planks:

  • Economic Growth: Achieved through lowering taxes and deregulation.
  • Trade Deficit Reduction: Aimed at bolstering domestic manufacturing by imposing tariffs on trading partners.

• Conflicting Outcomes:
  Lower taxes and deregulation are expected to spur investment and economic growth but may increase the budget deficit, leading to a stronger dollar and reduced competitiveness of US manufacturing. Conversely, imposing tariffs could hamper consumer spending and business sentiment, thereby slowing economic growth (08:44-09:31).

• Potential Treasury Secretary Candidates:
  Potential nominees like former Federal Reserve Governor Kevin Warsh, Robert Lighthizer, and hedge fund manager Scott Besant are likely to emphasize economic growth. However, determining who will champion the trade aspect remains uncertain, especially with Robert Lighthizer’s limited public presence recently and Howard Lutnick possibly overseeing trade policy (09:31-10:35).

• Market Expectations:
  According to Greg Ip, the markets predict that while Trump’s policies may favor growth through lower taxes and deregulation, the anticipated tariffs are likely to be moderate rather than extensive, favoring a growth-oriented approach over a tariff-first strategy (10:37-11:05).

Notable Quotes:

• Greg Ip elaborated on the conflicting nature of Trump’s agenda: “If you impose really high trade tariffs... that will tend to hurt consumer spending and business sentiment and slow down economic growth” (09:31).

• On market outlook, Ip stated, “In the markets estimation, you will not get the level of tariffs that Trump often talked about. It’ll be more like a sprinkling of tariffs rather than a tariff first agenda” (10:35).

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Conclusion

This episode of WSJ What’s News provided a comprehensive overview of significant global and domestic issues shaping the current economic and political landscape. From the ICC’s unprecedented arrest warrants impacting Israel’s leadership, to the volatile US housing and financial markets, alongside the tumultuous developments within Trump’s transition team and the complexities of his economic strategies, listeners were offered deep insights into the forces driving today's headlines.

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Produced by Anthony Bansi with supervising producer Michael Kazmitis. Host: Tracy Hunt for The Wall Street Journal.

Transcript

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[Tracy Hunt]

The International Criminal Court today issued war crimes arrest warrants for Israeli Prime Minister Benjamin Netanyahu and others.

[Omar Abdel Baki]

Analysts say that this is one of the most consequential or monumental decisions that the ICC he has made in comparison with issuing warrants with Russian President Vladimir Putin last year.

[Tracy Hunt]

And Matt Gaetz has withdrawn his nomination for U.S. attorney General. Plus why President elect Trump's growth and trade agendas are in conflict. It's Thursday, November 21st. I'm Tracy Hunt for the Wall Street Journal. This is the PM edition of what's the top headlines and business stories that move the world today. The International Criminal Court today said it has issued arrest warrants for Israeli Prime Minister Benjamin Netanyahu and former Defense Minister Yoav Gallant, along with top Hamas military leader Mohammed Daf Daef has been reported killed, but the ICC said it hasn't been able to confirm his death. Netanyahu's office said it strongly rejected the court's decision, calling it politically motivated and said Israel wouldn't retreat until all its war aims are achieved. Gallant called the ICC's decision outrageous for equating Israel with Hamas and said he was proud of his tenure leading the country's armed forces. Omar Abdel Baki is a Middle east correspondent for the Wall Street Journal and he joins us now. Omar, what are the court's allegations?

[Omar Abdel Baki]

There are a number of charges that include war crimes and crimes against humanity. One of the primary ones is using starvation as a weapon of war. The court alleges that Israel, under the directives of Gallant and Netanyahu, restricted humanitarian aid, including food and medicine, into the Gaza Strip from the beginning of the war into May. And another charge relates to crimes against humanity for murder and other atrocities and the targeting of civilians as well for Gallant and Ijniyahut. Similarly for Deif, he is also being charged with war crimes and crimes against humanities for the conduct of Hamas under his directives during the October 7 attacks on Israel.

[Tracy Hunt]

So Israel does not recognize the court's jurisdiction. But what effect would this warrant have on Netanyahu and Gallant?

[Omar Abdel Baki]

For members that are signed to the Rome Statute, which gives the ICC some of its powers, there are 120 plus states that are a part of that statute and basically Netanyahu and Gallant would not be able to travel to those countries or they would face the risk of being arrested upon arrival and turn to the ICC to face prosecution in the Hague, in the Netherlands, where the court is located. To not be able to travel to 125 countries as a head of state is quite a restriction. It also isolates Israel internationally and sends a statement that Israel is not complying with international law. Analysts say that this is one of the most consequential or monumental decisions that the ICC has made in comparison with issuing warrants with Russian President Vladimir Putin last year.

[Tracy Hunt]

That was Wall Street Journal Middle east correspondent Omar Abdel Baki. Thanks so much, Omar.

[Omar Abdel Baki]

Thank you for having me.

[Tracy Hunt]

A spokesperson for the U.S. national Security Council said the court doesn't have jurisdiction and that the US Quote, fundamentally rejects the decision. Sales of existing US Homes rose in October, producing the first year over year gain in sales in more than three years. The national association of Realtors today said that existing home sales in October rose 3.4% from the prior month to a seasonally adjusted annual rate of 3.96 million. Home sales in 2024 are still on track to hit the lowest level since 1995. But WSJ reporter Nicole Fried said a boost in activity during the fall could salvage another slow year for sales.

[Nicole Fried]

The increase in home sales in October reflected the fact that mortgage rates fell in August and September. And so that made it a little bit more affordable for homebuyers. And some of them jumped into the market and those deals that went under contract in August or in September closed in October. So the data is a little bit backward looking. And mortgage rates have risen since September and they are back closer to 7% now. And so some of that momentum has really stalled in the market. And this is also typically a slower time of year for home sales. People don't like to go shopping for a house over the holiday season and it's cold in a lot of the country. And so some of the momentum in home buying activity has slowed down and real estate agents expect that it could stay slow through the rest of the year.

[Tracy Hunt]

US Markets ended the day up. The Dow closed more than 1% higher and the S&P 500 closed up about half a percent. Nasdaq ticked up less than 0.1%. And Bitcoin hit a new intraday peak just above 99,000 today, continuing its wild rally on hopes of crypto friendly policies from the Trump administration. Coming up, the fallout from former Congressman Matt Gaetz's nomination and withdrawal continues. That's after the break. Matt Gaetz is out. The former Florida congressman today withdrew his nomination as President elect Donald Trump's pick for Attorney General. In a post on the social media site X, Gaetz wrote that his confirmation was becoming, quote, a distraction. Gaetz resigned from Congress last week. On the day Trump announced him as the Attorney general nominee, our Justice Department reporter Sadie Gurman says it became clear Republican lawmakers were prepared to reject his nomination amidst sexual misconduct and drug allegations.

[Sadie Gurman]

This is a huge political blow to Trump since his election and it's a signal that this sort of rapid fire installation of very unconventional cabinet picks might be potentially backfiring. We don't know exactly what caused this somewhat sudden decision, but what we do know is that allegations that were being investigated by the House Ethics Committee continued to seep out, with each one becoming worse than the next, including allegations that he had sex with a 17 year old at a drug fueled party. And so it looked as though more of those allegations were going to emerge around the time when he announced he was stepping aside.

[Tracy Hunt]

Meanwhile, according to people familiar with the matter, the Trump transition team was blindsided by the latest details to emerge about a 2017 sexual assault allegation against Defense Secretary nominee Pete Hegseth. Late last night, the Monterey City Police in California released a heavily redacted report that details a boozy night at a hotel, a poolside argument, and two conflicting versions of what ultimately took place inside of Hegseth's hotel room. Hegseth, who spent the day on Capitol Hill meeting with senators, told reporters that the matter was fully investigated and he was completely cleared. He maintains his sexual encounter was consensual. Officially, the Trump transition team is sticking by Hegseth, saying the report corroborates what he and his attorneys have said about the incident and staying with the President elect's nomination for his future administration. Former Federal Reserve Governor Kevin Warsh, former trade Ambassador Robert Lighthizer, and hedge fund manager Scott Besant are just some of the big names in the running to lead Trump's economic agenda. Think of it as the Apprentice treasury edition, but it isn't just great theater. Trump's choice will be key to where his economic agenda is headed. Greg IP is the Wall Street Journal's chief economics commentator and he joins us now. So, Greg, what are the two main planks of Trump's economic agenda?

[Greg Ip]

The first plank is he wants to promote economic growth by lowering taxes and bringing about deregulation. The second plank is he wants to eliminate the trade deficit and bolster domestic manufacturing jobs by imposing tariffs on our trading partners. The Problem is that these two planks of the agenda are in conflict with each other. If you succeed in boosting investment and economic growth, and if you do it with tax cuts that add to the budget deficit, that will tend to pull in more imports and push up the dollar, which makes our manufacturing less competitive. So that works against the second mission of trying to reduce the trade deficit. On the other hand, if you impose really high trade tariffs on our trading partners, that will tend to hurt consumer spending and business sentiment and slow down economic growth. And so that tends to work against the first plank of his agenda.

[Tracy Hunt]

Among the people that Trump is looking at for Treasury Secretary, are they more likely to champion economic growth or tariffs?

[Greg Ip]

The folks that he's looking at for Treasury Secretary, a lot of them fit into that traditional Wall street mold. Hedge fund managers, people who run a big private equity fund or who run a Wall street firm, they're very committed to economic growth, lower taxes, deregulation. They're generally okay with a strong dollar. And it's not that they're absolutely opposed to tariffs. None of the people that he's looking at for Treasury Secretary I would call a big tariff champion. But in the background is a guy named Robert Lighthizer. And everybody considers him the main architect of Trump's trade program. But we haven't seen much from him in the last few days. And indeed, a different gentleman named Howard Lutnick, who is from Wall street, is said to be in charge of trade policy, which leaves open the question, well, who in this administration is going to be there pushing for that other piece of Trump's agenda? And it doesn't look like right now that there is an obvious name.

[Tracy Hunt]

And what is the market expecting?

[Greg Ip]

We've seen the stock market rally since Trump was elected president. That's a sign that they expect that his policies will be good for profits. Now, you also see a rise in the dollar and weak performance by foreign stock markets. That's a sign that markets expect that there will be tariffs. In the markets estimation, you will not get the level of tariffs that Trump often talked about. It'll be more like sort of a sprinkling of tariffs rather than a tariff first agenda. It'll be the growth agenda that wins out.

[Tracy Hunt]

That was our chief economics commentator, Greg ip, and that's what's news for this Thursday afternoon. Today's show was produced by Anthony Bansi with supervising producer Michael Kazmitis. I'm Tracy Hunt for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.