Why the San Francisco Fed President Supports a Rate Cut in December

Summary

Podcast Summary: WSJ What’s News

Episode: Why the San Francisco Fed President Supports a Rate Cut in December
Date: November 24, 2025
Host: Alex Osolleff (The Wall Street Journal)

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Episode Overview

This episode dives into several major business and geopolitical stories of the day, with a primary focus on San Francisco Fed President Mary Daly’s support for a December interest rate cut. The episode also features in-depth discussions on Trump’s Ukraine peace plan, diplomatic moves between the U.S. and China, the private equity job exodus, and other notable business headlines including leadership changes at Kohl’s and setbacks for Novo Nordisk.

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Key Discussion Points & Insights

1. San Francisco Fed President Backs December Rate Cut

• Mary Daly's Position: Daly is advocating for an immediate rate cut at the Federal Reserve’s upcoming meeting, citing a weakening jobs market as a more pressing concern than potential inflation spikes.
  • “Daly says she would cut rates because a worsening jobs market is more of a risk right now than a big increase in inflation.” (01:17)
• Context: Daly’s public divergence from Fed Chair Jerome Powell is unusual, making her stance significant. Powell is expected to play a deciding role among Fed officials.
• Market Response: Optimism for a December rate cut boosts equities; probability of a cut rises from 40% to 80% over the last week.
  • Market Impact:
    • NASDAQ: +2.7%
    • S&P: +1.6%
    • Dow: +0.4%
• Notable Quote:
  • “Growing hopes for a rate cut next month are helping revive stocks.” — Alex Osolleff (01:36)

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2. Trump’s Ukraine Peace Plan: Territorial Concessions and Security Guarantees

Guest: Michael Gordon, WSJ National Security Correspondent

• Background: Talks in Geneva yield some common ground, but major decisions deferred to President Trump and Ukraine’s President Zelenskyy.
• Kyiv's Central Objection: Ukraine opposes ceding more of Donbas — especially areas it still controls — fearing vulnerability to future Russian attacks.
  • “This plan would require Ukraine to relinquish some of the Donbas that they still hold...and they've objected to that.” — Michael Gordon (00:39, 02:51)
• Key Ukrainian Demands:
  • European peacekeepers on Ukrainian soil
  • No constraints on Ukraine’s military size
  • Russia-backed plan seeks to bar European troops and cap Ukrainian army at 600,000
    • “They want European peacekeepers on Ukrainian soil as a deterrent … the other thing is they don't want any constraints on the size of their military.” — Michael Gordon (02:56)
• Russian Stance:
  • Little willingness to negotiate despite heavy casualties; focus remains on gaining territory.
    • “Right now, the Russians don't appear to be in much of a negotiating frame of mind.” — Michael Gordon (03:52)
• US Strategy Criticism:
  • The White House seen as pressuring Ukraine more than Russia.

Memorable Quote

• “This is fundamentally about sovereignty, Ukraine's sovereignty and Ukraine's security.” — Michael Gordon (02:51)

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3. US-China Diplomacy: Xi Calls Trump

• First-Person Diplomacy: Xi Jinping personally calls President Trump, discussing Taiwan amid tensions with Japan.
  • “China's leader Xi Jinping initiated a phone call with President Trump to talk about Taiwan in a rare diplomatic outreach…” — Alex Osolleff (04:30)
• Regional Tension:
  • Japan's PM warns of war spillover if China takes Taiwan by force.
• White House Response:
  • Trump’s social post notes upcoming visits but omits mention of Taiwan or current diplomatic crises, raising concerns among US allies.

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4. Other Political Headlines

• Legal Developments: Federal judge dismisses criminal charges against James Comey and Letitia James; Trump’s chosen prosecutor found unlawfully appointed.
  • “A federal judge has dismissed criminal charges against both former FBI Director James Comey and New York Attorney General Letitia James.” — Alex Osolleff (05:03)
• Healthcare Policy: Trump’s advisers considering a two-year Affordable Care Act subsidy extension to mitigate insurance cost increases.
• Sen. Mark Kelly Investigation:
  • Pentagon probes allegations after Kelly appears in a video urging troops to disobey unlawful orders.

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5. Private Equity Exodus: Talent Fleeing Big Firms

Guest: Miriam Gottfried, WSJ private equity reporter

• Industry Shift:
  • Larger private equity firms become more institutional (“almost becoming bank like”), changing from their nimble, deal-focused origins.
  • “The biggest firms have become massive institutions that have kind of changed from what they originally were...now they're almost becoming bank like.” — Miriam Gottfried (07:26)
• Cyclical Problems:
  • Many big firms “stuck” with assets they can’t sell profitably; no realized profits means no “carried interest” for employees.
    • “Firms...bought a bunch of companies that they can't really sell profitably right now…” — Miriam Gottfried (07:39)
• Why Small Firms Look Better:
  • Focused portfolios, higher returns, and none of the legacy baggage hampering exits
    • “Smaller firms tend to be more focused … many of the smaller funds that we write about...are actually startups. That means they have none of these portfolio companies that they can't sell.” — Miriam Gottfried (08:19)
• Long-Term Risk:
  • The big firms’ culture and appeal might erode if top talent leaves for startup funds.
    • “If the best investors don't want to work for us anymore, what does that mean for the quality of the product we're able to deliver?” — Miriam Gottfried (08:50)

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6. Business Briefs

• Kohl’s Names Permanent CEO: Michael Bender, interim CEO since May, is named permanent chief as retailer fights to end a sales slump.
• Novo Nordisk Alzheimer’s Setback: Clinical trials of an Ozempic-related pill fail to slow Alzheimer’s. Shares drop; Eli Lilly overtakes in obesity drug market.
• Tobacco in Pop Culture:
  • Despite declining U.S. smoking rates, depiction of tobacco in movies and songs is rising, worrying anti-smoking advocates.
  • “A new report says that cigarettes, cigars and other tobacco products appeared in about half of movies that came out last year, up 10% from 2023.” — Alex Osolleff (10:04)

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Notable Quotes with Timestamps

• Mary Daly's Position:
  • “Daly says she would cut rates because a worsening jobs market is more of a risk right now than a big increase in inflation.” — Alex Osolleff (01:17)
• Ukraine Peace Plan:
  • “This is fundamentally about sovereignty, Ukraine's sovereignty and Ukraine's security.” — Michael Gordon (02:51)
  • “They want European peacekeepers on Ukrainian soil as a deterrent in case the Russians would attack again in the future.” — Michael Gordon (02:56)
  • “Right now, the Russians don't appear to be in much of a negotiating frame of mind.” — Michael Gordon (03:52)
• Private Equity Exodus:
  • “The biggest firms have become massive institutions...almost becoming bank like.” — Miriam Gottfried (07:26)
  • “Firms...bought a bunch of companies that they can't really sell profitably right now…” — Miriam Gottfried (07:39)
  • “If the best investors don't want to work for us anymore, what does that mean for the quality of the product we're able to deliver?” — Miriam Gottfried (08:50)

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Useful Timestamps for Important Segments

• Daly’s Rate Cut Stance and Market Reaction: 00:55–02:00
• Ukraine Peace Plan Interview (Michael Gordon): 02:51–04:25
• US-China Diplomatic Update: 04:30–05:20
• Private Equity Exodus (Miriam Gottfried): 07:23–09:17
• Tobacco in Pop Culture: 10:04–11:04

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Conclusion

This episode encapsulates a day of significant market movement, global political tensions, and evolving trends in the finance world. Highlights include Mary Daly's rare advocacy for an immediate Fed rate cut, a nuanced look at diplomatic wrangling over Ukraine and Taiwan, and a private equity industry metamorphosis that may shape future financial talent flows and firm performance. The episode closes with concise business headlines, maintaining the fast-paced, informative tone characteristic of WSJ’s What’s News.

Transcript

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[Alex Osolleff]

A key Fed official says she supports a December rate cut plus what's next for Trump's Ukraine peace plan?

[Michael Gordon]

This is fundamentally about sovereignty, Ukraine's sovereignty and Ukraine's security. And yes, this plan would require Ukraine to relinquish some of the Donbas that they still hold a portion of. And they've objected to that.

[Alex Osolleff]

And why employees at big private equity firms are jumping ship, leaving behind paydays that could be worth millions. It's Monday, November 24th. I'm Alex Osolleff for the Wall Street Journal. This is the PM edition of what's news, the top headlines and business stories that move the world today. In an exclusive interview with the Wall Street Journal, San Francisco Fed President Mary Daly said today that she supports lowering interest rates at the central bank's meeting next month. Daly doesn't have a vote on monetary policy this year, but her views are notable as she rarely has been in public opposition with Fed Chair Jerome Powell. Powell is likely to play the key role, resolving officials differences on whether to cut rates in December. Daly says she would cut rates because a worsening jobs market is more of a risk right now than a big increase in inflation. Growing hopes for a rate cut next month are helping revive stocks. Market bets on a December rate reduction rose to 80%, up from about 40% a week ago. Chip stocks and other big technology shares jumped today and The NASDAQ rose 2.7%. Leading gains. The S&P rose 1.6% and the Dow added 0.4%. As we mentioned on this morning's show, the White House says it has made progress towards ending the war in Ukraine after this weekend's talks in Geneva. European diplomats say that negotiators found some common ground on the planet. But European officials familiar with the matter say the biggest issues will be left to President Trump and Ukrainian President Volodymyr Zelenskyy to work out. Here to walk us through where the negotiations stand is WSJ national security correspondent Michael Gordon. Michael Zelenskyy's main problem with the plan is the Kremlin's demand for Ukraine's territory in the east of the country, including territory it hasn't captured. He says that would leave Ukraine vulnerable to future attack by Russia. How much of a sticking point is this?

[Michael Gordon]

The Trump administration is the tendency to cast this in terms of territory. But that's not what this is about. This is fundamentally about sovereignty, Ukraine's sovereignty and Ukraine's security. And yes, this plan would require Ukraine to relinquish some of the Donbas that they still hold a portion of, and they've objected to that. But what does Ukraine want? They want European peacekeepers on Ukrainian soil as a deterrent in case the Russians would attack again in the future. That's one thing they want. The other thing is they don't want any constraints on the size of their military. This plan that the Trump people put together with Russian input bars European reassurance force, as it's called, from being deployed in Ukraine. And it also caps the Ukrainian military at 600,000.

[Alex Osolleff]

So let's say the U.S. ukraine and Europe are able to reach an agreement. What are the prospects of Russia then agreeing?

[Michael Gordon]

Right now, the Russians don't appear to be in much of a negotiating frame of mind. They're taking enormous casualties, but they're willing to pay that price to grind forward and claim more ground. So what are the prospects of Vladimir Putin changing his strategic objectives? I would say not great. And heretofore, there's also been a penchant by the White House to put more pressure on the Ukrainian side than the Russian side.

[Alex Osolleff]

That was WSJ national security correspondent Michael Gordon. Thank you, Michael.

[Michael Gordon]

Thank you.

[Alex Osolleff]

In four Trump administration related developments today, China's leader Xi Jinping initiated a phone call with President Trump to talk about Taiwan in a rare diplomatic outreach from China that follows growing tensions with Japan.

[Michael Gordon]

China.

[Alex Osolleff]

Japan's new prime minister has said the country would likely get sucked into a war if China tried to take Taiwan by force. In a social media post today, Trump said he accepted Xi's invitation to visit Beijing in April and that Xi would visit the US later next year. He didn't mention Taiwan or the diplomatic crisis between Beijing and Tokyo, an omission that's likely to rattle US Allies in the region. Trump said he and Xi discussed the war in Ukraine. Among other things, a federal judge has dismissed criminal charges against both former FBI Director James Comey and New York Attorney General Letitia James. In a blow to President Trump's efforts to prosecute his perceived political adversaries, the judge ruled that Lindsey Halligan, the prosecutor Trump chose to bring the cases was unlawfully appointed. White House press secretary Caroline Levitt says the Justice Department plans to appeal. President Trump's advisers are discussing a proposal to head off sharp increases in health insurance costs for millions of Americans next year. People familiar with the strategy say the White House officials are weighing a two year extension of enhanced Affordable Care act subsidies. Lawmakers are facing a mid December deadline for health care votes promised by the GOP to Democrats as a condition for ending the government shutdown earlier this month. The subsidies expire at the end of the year. White House officials cautioned that Trump hadn't settled on a plan. And the Pentagon says it's probing allegations of misconduct against Democratic Senator Mark Kelly of Arizona after he appeared in a video with other Democrats calling on troops to disobey unlawful orders. Kelly, a retired Navy captain, says efforts to intimidate him won't stop him from doing his job. Coming up, why employees at private equity firms are leaving for smaller rivals. That's after the break. AI Is here and Chevron is working to power it. We're aiming to develop multi gigawatt power plants near data centers. AI Gets the power it needs, communities get the jobs, and the grid stays strong. A job at a big private equity firm such as Blackstone, KKR or TPG was once a ticket to lifelong riches. And the bigger the firm, the bigger the payday. Now, as the industry struggles to unload companies, many employees are headed for the exits for jobs at smaller firms where they're betting they'll be able to earn more. Miriam Gottfried, who covers private equity for the Journal, is here to explain why some employees are taking their chances elsewhere. Miriam, what's going on that's making these big firms less desirable for employees?

[Miriam Gottfried]

Well, there are two separate things I would say. One is sort of a secular shift. The biggest firms have become massive institutions that have kind of changed from what they originally were. They originally were these sort of nimble deal shops and now they're almost becoming bank like. But then a more cyclical thing is also happening, and that's that firms that are pretty established bought a bunch of companies that they can't really sell profitably right now, which means they're not exiting their deals, they're not selling them off. And that means that employees, they're not receiving the typical carried interest compensation that they might be. And this is performance based compensation for their deals. Basically the 20% of profits that go to the manager of a private equity fund. The longer you wait for it, the less faith you have that you're actually going to get it.

[Alex Osolleff]

Why is this more advantageous for the employees at smaller firms?

[Miriam Gottfried]

Well, smaller firms tend to be more focused. They might have just one fund instead of many different funds. These smaller funds also tend to have higher returns. And many of the smaller funds that we write about in the story are actually startups. That means they have none of these portfolio companies that they can't sell. They're starting from scratch, shifting to the.

[Alex Osolleff]

Big private equity firms. I mean, just how dire is this exodus for them? What does it mean for their future if a bunch of mid level people are leaving?

[Miriam Gottfried]

I don't think it's dire because there are always people who are staying. These firms are big, but one thing that these firms have to think about in the long run is culturally, are we able to attract the type of a investors that we once were able to? If the best investors don't want to work for us anymore, what does that mean for the quality of the product we're able to deliver?

[Alex Osolleff]

That was WSJ reporter Miriam Gottfried. Thanks, Miriam.

[Miriam Gottfried]

My pleasure.

[Alex Osolleff]

Kohl's has named Michael Bender as its new CEO. He's been the retailer's interim CEO since May after its then chief, Ashley Buchanan, was fired for violating the company's ethics code. Bender is largely continuing a strategy to try to reverse the company sales slump. And shares of Novo Nordisk slid in European trading after the Danish drug maker said a pill with the key ingredient in Ozempic and Wegovy didn't slow Alzheimer's disease in two late stage clinical trials. It's the latest setback in a tough year for the company, whose lead in the obesity drug market was overtaken by rival Eli Lilly. Novo Nordisk has been through a leadership shakeup and layoffs and recently lost a bidding war for obesity drug startup Metcera Foreign. Cool again. US Smoking rates are at their lowest level in decades, but celebrities are lighting up, and that's making anti smoking advocates worry. A new report says that cigarettes, cigars and other tobacco products appeared in about half of movies that came out last year, up 10% from 2023. They're coming up in songs, too, like TikTok star Addison Rae's single headphones on earlier this year, where the chorus includes the line need a cigarette to make me feel better? And in Lorde's what Was that? Where she says, this is the best cigarette of my life. The Centers for Disease Control and Prevention has said that smoking in movies helps push young people into taking up smoking and cigarettes appeal. Today, some young smokers say it just looks cool and that's what's news for this Monday afternoon. Today's show was produced by Pierre Bienname with supervising producer Tali Arbel. ALEX I'm Alex Osoleff for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

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