--:-- Alex Osola: Voices are powerful things. At Vanguard, investors are also owners, and their voices are heard. And now with Investor Choice, they have an even greater voice when investing. It's just another reason millions of investors have turned to Vanguard for 50 years. 50 million investors, 50 million voices. Vanguard. Vanguard is owned by its funds, which are owned by Vanguard's fund shareholder clients. To learn more, visit Vanguard.com. All investing is subject to risk. Vanguard Marketing Corporation Distributor, figure as of January 2025.
--:-- Alex Osola: What Walmart's longtime CEO stepping down means for the company's future. Plus, what's driving yet another volatile day in markets. And how online retailer Quince is scraping the internet in its quest to sell you cheaper cashmere sweaters. A lot of these digital-first fashion brands that are really big now, they all have a very similar model, where they're able to predict what shoppers are going to buy, and then they operate in real time. It's Friday, November 14th. I'm Alex Osola 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.
--:-- Alex Osola: Walmart CEO Doug McMillan is stepping down after over a decade in the role, a change at the top of the country's largest retailer and private employer. Under his leadership, Walmart went from a struggling retailer with stagnant sales to an e-commerce rival to companies like Amazon with diverse revenue streams.
--:-- Chip Cutter: This is McMillan in an interview with the Stanford Graduate School of Business earlier this year. We eventually figured out what we wanted to do with e-commerce, and now the growth rate's gone back up. We have a more sustainable business model, and now we make money from membership, advertising, and some other things that flow from that e-commerce investment.
--:-- Alex Osola: Walmart says John Ferner, company lifer and head of its U.S. division, will become the new Walmart CEO in February. For more on the transition and what it means for the company, WSJ reporter Chip Cutter, who covers management, joins me now.
--:-- Chip Cutter: Macmillan really tried to sort of reorient Walmart for the digital age. So he made a number of big acquisitions. Under Macmillan, e-commerce sales took off. There was also an attempt by Macmillan to really change the image of Walmart and to change what it meant to work there. Walmart is, of course, the nation's largest private employer. He increased hourly wages and he tried to sort of increase employee retention to make it a place that people wanted to work and stay.
--:-- Chip Cutter: And I think a lot of his efforts, which have been rewarded by Wall Street, have been focused on how do I modernize this company and just reflect sort of the way that people shop and consume now. Walmart hadn't indicated recently that a CEO transition was imminent. Does the change at the top suggest any shift in Walmart's strategy? It's hard to say. And of course, Ferner has been a company employee for a long time now. So I think from the outside, it certainly is expected that Walmart will continue on its trajectory.
--:-- Chip Cutter: And company executives have also been talking recently about how they do want to change the company to sort of meet this AI moment that we're in recently. Walmart recently hired head of AI Acceleration, and McMillan had said the company was bracing for AI to change, quote, literally every job. So Walmart knows that AI is going to change shopping It going to change work and I think a lot of the company leaders are focused on that
--:-- Alex Osola: How are Wall Street and investors reacting to this news? Macmillan has had just an incredible run. Shares have risen more than 400% on a total return basis under his tenure. Certainly, Ferner is somebody who is known to the Wall Street community. We'll have to see where he takes the company from here.
--:-- Alex Osola: That was Journal reporter Chip Cutter. Thank you, Chip. Thank you.
--:-- Alex Osola: President Trump says he will ask the Justice Department and the FBI to launch an investigation into Jeffrey Epstein's relationship with former President Bill Clinton and other Democrats. Posting on social media this morning, Trump said Democrats were focusing on his ties to Epstein to distract from their own political vulnerabilities.
--:-- Alex Osola: The president also says the investigation should examine JPMorgan Chase. A representative for Clinton didn't immediately respond to a request for comment. Attorney General Pam Bondi says she asked Jay Clayton, the U.S. attorney for the Southern District of New York, to take the lead on the request.
--:-- Alex Osola: A JPMorgan Chase spokeswoman said the bank regrets its association with Epstein, but that it didn't help him commit any, quote, heinous acts. Democrats have sought to highlight ties between Trump and Epstein, and a bipartisan group of lawmakers is pushing for the release of the Justice Department's investigative files into Epstein.
--:-- Alex Osola: A vote on that in the House of Representatives is scheduled for next week. And in other news on the Trump administration, a classified Justice Department brief authorizing strikes on drug smuggling boats describes fentanyl as a potential chemical weapons threat. That's according to a member of the House and another person familiar with the memo.
--:-- Alex Osola: The document outlines the Trump administration's legal justification for the continuing military operation. It argues that President Trump's designation of drug cartels as foreign terrorists makes them legitimate military targets. The Pentagon has carried out 20 known strikes against boats it says are carrying illegal drugs in the Caribbean and the Pacific, killing at least 80 people.
--:-- Alex Osola: It has not made public any evidence supporting claims about the vessels since the first attack in September. Relief over the end of the government shutdown has given way to investors' concerns about lofty tech valuations and whether the Federal Reserve will slow interest rate cuts.
--:-- Alex Osola: Here's David Uberti, who covers markets for the journal. Well, there's been mounting concerns since earnings season, really, that some of these big bets on AI won't necessarily pay off. And that really varies by company, depending on what your capital expenditure plan might be and what you actually aim to do with AI.
--:-- David Uberti: If you maybe are hemorrhaging money and are tied to open AI, which has not come close to turning a profit, for example, that could hurt your bottom line if you're a supplier to open AI. And those sorts of questions have been replicated across the sector.
--:-- David Uberti: That said, not necessarily everyone who's thrown a lot of money into AI is down. So I think what you see increasingly, this is sort of bifurcation. And just rather than people throwing money at the theme broadly, a little bit more sort of interrogation of the underlying specifics of what these companies are actually spending and what they aim to do.
--:-- Alex Osola: Today's markets bounced around as tech stocks paired steep initial losses. The Nasdaq gained 0.1%, the Dow dropped 0.7%, and the S&P was slightly in the red. David says we can expect volatility to continue The VIX has definitely been up the last couple of days We coming out of this longest government shutdown in U history So people on Wall Street they sort of waiting for this deluge of data to figure out what's actually happening in the U.S. economy.
--:-- Alex Osola: And that could come in like a very staccato set of data releases. So we'll understand what has happened, you know, September, October, November, and December just in a couple of weeks rather than having that information spanned out over months. So I think the long and short of it is that you should expect more volatility ahead.
--:-- Alex Osola: The federal government will release the first backlogged monthly jobs report, the one for September next Thursday. More data is due to start flowing soon.
--:-- Alex Osola: Coming up, how does online retailer Quince always have what you're looking for? That's after the break.
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--:-- Alex Osola: The U.S. has reached a trade deal with Switzerland, reducing tariffs on the country from 39% to 15%. The deal includes Swiss companies relocating some manufacturing to the U.S. and investing $200 billion in the U.S. by the end of 2028.
--:-- Jameson Greer: They're going to send a lot of their manufacturing here to the United States, pharmaceuticals, gold smelting, railway equipment. So we're really excited about that deal and what it means for American manufacturing.
--:-- Alex Osola: Trump shocked Switzerland in August when he imposed the 39 percent tariff. The country's economy, which relies on exports like watches, chocolate and medications, has strained under the tax. and Swiss officials and business executives have been pushing for a resolution.
--:-- Alex Osola: Today's deal comes after a charm offensive from Swiss business executives, whose efforts include an Oval Office meeting earlier this month when they brought President Trump an engraved gold bar and a Rolex desk clock.
--:-- Alex Osola: Immediately after, the president ordered his administration to kickstart the stalled negotiations with the Swiss government. The White House says the deal with Switzerland will put it on a path to eliminate a trade imbalance with the U.S. by 2028.
--:-- Alex Osola: And a White House spokesman said that, quote, the only special interest guiding President Trump's decision-making is the best interest of the American people.
--:-- Alex Osola: We're exclusively reporting that Topgolf Callaway Brands is in talks to sell driving range operator Topgolf to private equity firm Leonard Green. People familiar with the matter said that the deal would value Topgolf at about $1 billion.
--:-- Alex Osola: Leonard Green has already taken a small stake in Topgolf and, given the company's management, feedback on its business. Topgolf Callaway had said last year that it planned to split itself into two separate companies.
--:-- Alex Osola: If you've browsed for clothes online in the past few years, chances are you've seen products from a company called Quince. And if you're like me, you've been absolutely inundated with ads for the company's sweaters or sheets or boots.
--:-- Alex Osola: That's all part of its strategy. Find a hot item, price it cheaper, and then nab the shopper before they spend their money elsewhere. And this strategy seems to be working. Quince sells everything from tennis bracelets to pickleball sets to magnesium supplements and is expanding its offerings to food like wine olive oil and coffee
--:-- Alex Osola: The company has more than billion in annual revenue and says it nearly profitable Javi Lever covers fashion and culture for the journal and is here to tell us how Quince is doing this.
--:-- Javi Lieber: Quince has been really strategic about finding exactly what you want and then making it at a lower price. So they have built proprietary technology where they are basically scraping the web, looking at what some of the best sellers are at all these top brands, and making the stuff that everybody wants to buy.
--:-- Javi Lieber: It seems preternaturally good at guessing what it is that people are looking for. Is that just a really good algorithm? Do they have excellent fashion sense? What's the secret sauce here?
--:-- Javi Lieber: They were very careful about what it is that they built, but it sounds like it's a combination of predicting technology, for sure there's AI involved in there. It's worth noting that a lot of these digital-first fashion brands that are really big now, like Shein, like Cider, they all have a very similar model where they're able to predict what shoppers are going to buy, and then they operate in real time.
--:-- Javi Lieber: And how is it doing it so much more cheaply than other retailers? The CEO, Sid Gupta, told me that they have a couple of ways that they do this. First of all, They don't own factories, but they work directly with them. And they say that they cut out the middleman. So anyone in the process of making clothing, like sourcing fabrics or third parties to work with factories, and then they claim that they have less waste.
--:-- Javi Lieber: I feel like the thing that always comes up with fast fashion is quality. What do outside experts say about their quality? I interviewed a manufacturing and sourcing expert, Melanie DeSalvo, and she thinks Quince is saving costs with production. So she thinks that the sewing is not as high quality. They're not using as much material.
--:-- Javi Lieber: Quince, of course, they dispute this. They say that they operate on the highest of quality and that they're cutting costs with their business model and not with quality. And then if you talk to shoppers, some people said they love quince. And then some shoppers said that they were disappointed with the quality.
--:-- Alex Osola: That was WSJ reporter Javi Lieber. Thanks, Javi. Thank you.
--:-- Alex Osola: And that's what's news for this week. Tomorrow you can look out for our weekly markets wrap-up, What's News in Markets. Then on What's News Sunday, we'll look at whether we're entering a restaurant recession and whether young consumers pull back from fast casual spots like Sweetgreen and Cava could signal trouble for the broader economy.
--:-- Alex Osola: And we'll be back with our regular show on Monday morning. Today's show was produced by Pierre Bien-Amey and Zoe Kolkin with supervising producer Tali Arbel. Michael LaValle wrote our theme music. Jessica Fenton is our technical manager. Aisha El-Muslim is our development producer. Chris Zinsley is our deputy editor, and Philana Patterson is the Wall Street Journal's head of news audio. I'm Alex Osola. Thanks for listening.
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