--:-- Alex Osula: This podcast is brought to you by Dynatrace, the leader in AI-powered observability, with analytics, automation, and next-level intelligence on one unified platform. Dynatrace delivers the visibility and real-time insights you need to deliver better, more secure software, successful AI initiatives, and innovation at the speed of business. Turn data into decisions that drive your business forward with AI-powered observability where it counts. Learn more at dynatrace.com slash WSJ. That's www.dynatrace.com slash WSJ.
--:-- Alex Osula: Microsoft is laying out its AI vision, separate from longtime partner OpenAI. Microsoft's goal is to not have to rely on OpenAI for any of its tech. That's what they're working toward, but it's going to take some time for them to separate from OpenAI.
--:-- Alex Osula: Meanwhile, investors' jitters around artificial intelligence send the Nasdaq to its worst week since April. And travelers' pain over canceled flights might get even worse. It's Friday, November 7th. I'm Alex Osula 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 Osula: It's been a dramatic week in markets. The AI boom has driven stocks sky high. And this week, investors' confidence in that wavered.
--:-- Hannah Aaron-Lang: Obviously, the AI trade kind of dominates the entire stock market right now. And it's being powered by these major tech companies that are spending billions and billions of dollars to rapidly build out these capabilities.
--:-- Hannah Aaron-Lang: And the big question that investors have is, is all of this money that we're spending going to be worth it? Is the price that I'm paying for this stock justified by what those profits will look like down the line?
--:-- Hannah Aaron-Lang: And stock valuations are quite high right now. We've seen those jitters kind of reach a fever pitch this week and spread throughout the market and ultimately drive stocks lower.
--:-- Hannah Aaron-Lang: And reports on mounting job cuts and anxious consumers caused worries, especially in the absence of economic data from the government during the shutdown.
--:-- Hannah Aaron-Lang: A monthly survey from the University of Michigan shows consumer sentiment in November falling to near-record lows.
--:-- Hannah Aaron-Lang: The Nasdaq had its worst week since April, closing down 3 percent over the five trading sessions. For the week, the S&P 500 dropped 1.6 percent, while the Dow ended down 1.2 percent.
--:-- Hannah Aaron-Lang: For today alone, though, trading was mixed after some steep declines earlier in the week, with small gains for the S&P and the Dow and a slight retreat in the Nasdaq.
--:-- Alex Osula: If you're traveling today, chances are you're feeling the effects of flight delays and cancellations. The Federal Aviation Administration has ordered traffic cuts at 40 airports to keep skies safe during the government shutdown.
--:-- Alex Osula: It's starting with traffic cuts of 4% today, and airlines have canceled hundreds of flights. That's not that big a deal by historical standards, but cuts are supposed to grow to 10% by next Friday.
--:-- Alex Osula: And then things might get even worse.
--:-- Sean Duffy: So if this shutdown ends relatively soon, the consequence of that is gonna be more controllers come to work, then we're going to have to continue to assess the pressure in the airspace and make decisions that may again move us from 10 percent to 15 percent maybe to 20.
--:-- Alex Osula: Flight reductions are expected to continue until the end of the shutdown. If you're flying soon, keep an eye on your email or airline app for updates. If your flight gets canceled, the airline will typically put you on another flight. though you have the option to accept or reject it.
--:-- Alex Osula: The White House is pushing to ramp up deportations, and that's causing infighting at the Department of Homeland Security over which tactics to use to remove people from the U.S. That's according to people familiar with the matter.
--:-- Alex Osula: Michelle Hackman covers immigration policy for the journal and is here now with more.
--:-- Michelle Hackman: Michelle, as I understand it, there are two kinds of schools of thought here. What is each one saying and who are the big names in each?
--:-- Michelle Hackman: At DHS, they're traditionalists, and a lot of those people are at ICE. And they believe they have the tools to be able to carry out Trump's mass deportation.
--:-- Michelle Hackman: And that involves using policing methods like coming up with target lists of immigrants, trying to catch them outside of their homes, trying to go after criminals first because it's easier to deport those people.
--:-- Michelle Hackman: Their tactics and methods were not big and splashy enough for some at the top of DHS, like Kristi Noem.
--:-- Michelle Hackman: And so we've seen some other approaches emerge, too. Greg Bovino, he's a Border Patrol veteran, started running this big campaign in Southern California where he was taking his Border Patrol agents and doing, like, big raids on farms and factories.
--:-- Michelle Hackman: They were really crucially putting those raids on social media, posting videos. And so Kristi Noem asked Greg Bovino to go lead operations in L.A. and later brought him to Chicago.
--:-- Michelle Hackman: You've probably seen tons of videos of people getting arrested on the street in Chicago, getting tackled. And people think that's ICE because that's who does deportations, right? But it actually is the Border Patrol carrying all that out.
--:-- Michelle Hackman: And what has DHS said about this publicly? A DHS spokeswoman told us and has said publicly numerous times that there are no divisions of DHS, that they're basically rowing in one direction and that they expect to carry out about 600,000 deportations by the end of Trump's first year in office.
--:-- Alex Osula: I'm curious about the political implications here. So there was a WSJ poll that was published in July that showed that voters said they supported President Trump's immigration curbs but said that the tactics went too far.
--:-- Michelle Hackman: What does this mean for President Trump? The mass deportation is a really salient question for Trump's supporters. And so it could have a dampening effect of support if Trump is seen as not meeting that goal.
--:-- Michelle Hackman: Will people be satisfied with splashy tactics or are they ultimately going to want to see numbers?
--:-- Michelle Hackman: On the other end of things, we've seen really preliminary evidence that some of these immigration raids have had a dampening effect on Hispanics moving toward the Republican Party.
--:-- Michelle Hackman: We saw a swing back among Hispanic voters toward Democrats in elections this week. The question is whether ICE raids become one of the most salient issues to those voters or whether they thinking about other things when they go to the ballot box next year.
--:-- Alex Osula: That was WSJ reporter Michelle Hackman. Thanks, Michelle. Thank you.
--:-- Alex Osula: Coming up, what does Microsoft's AI program look like without OpenAI? That's after the break.
--:-- Alex Osula: Exchanges. The Goldman Sachs podcast featuring exchanges on navigating macro uncertainty. Exchanges on the forces shaping global markets. For the sharpest analysis on finance, business, and the economy. Count on exchanges between leading minds at Goldman Sachs. New episodes every week. Listen now.
--:-- Alex Osula: Microsoft and OpenAI have had an artificial intelligence partnership for years. Now, though, Microsoft's top artificial intelligence executive has laid out a new vision for the company's AI ambitions.
--:-- Alex Osula: Here's Microsoft's AI chief, Mustafa Suleiman.
--:-- Mustafa Suleiman: We are free to develop our own superintelligence and become AI self-sufficient. And for a company, you know, with $300 billion of revenue and, you know, $3 trillion of market cap, been around 50 years, we have to be self-sufficient.
--:-- Mustafa Suleiman: And that's like a mission-critical objective which the board has set.
--:-- Alex Osula: WSJ tech reporter Sebastian Herrera joins us now.
--:-- Sebastian Herrera: Yeah, so Microsoft is creating this new superintelligence team. And the way that they're diverging from OpenAI is if you think of OpenAI, they're really known for conversational AI.
--:-- Sebastian Herrera: And it's like you're talking to a human being. And Microsoft's approach is that we're not trying to work so much on trying to have these conversations where it's like human-like.
--:-- Sebastian Herrera: If anything, they say talking to AI and interacting with AI shouldn't be like talking to a human. We shouldn't over-empathize with it. It's actually here to help us solve the world's hardest problems.
--:-- Sebastian Herrera: It's here to help us solve healthcare and science and clean energy problems. And that's how they're trying to separate what they're doing from what their partner, OpenAI, is doing.
--:-- Sebastian Herrera: So Microsoft and OpenAI are still partners for now, but it sounds like they're also going to be a bit more competitors. Do the two expect to one day separate completely? And if so, what would that take?
--:-- Sebastian Herrera: It is a bit of an awkward relationship because Microsoft still relies on OpenAI for a lot of its tech.
--:-- Sebastian Herrera: Microsoft and OpenAI are still really close partners, and they still have a contract that goes through at least 2032.
--:-- Sebastian Herrera: Microsoft is also a huge investor in OpenAI, so they're still very much tied financially to OpenAI.
--:-- Sebastian Herrera: However, part of the reason that Microsoft is trying to create its own tech is that if OpenAI doesn't exist in five years, Microsoft still wants to have their player in the game.
--:-- Sebastian Herrera: They still want to be able to make their own impact in AI. Microsoft's goal is to not have to rely on OpenAI for any of its tech. That's what they're working toward. But it's going to take some time for them to separate from OpenAI.
--:-- Alex Osula: We heard earlier from Microsoft's AI chief, Mustafa Suleiman. Who is he and where is he coming from on AI?
--:-- Sebastian Herrera: He has a pretty interesting journey. He's from London. He co-founded DeepMind, which was bought by Google. And then he went on to found Inflection AI, which he was at before Microsoft hired him to become its AI chief executive.
--:-- Sebastian Herrera: So he's been in the industry for a long time. He hasn't necessarily ever created a hit product per se, but he is thought of as someone who's really trying to push this tech forward.
--:-- Sebastian Herrera: I should note that Microsoft is seen as being pretty behind OpenAI. And internally, Microsoft employees feel like they're still years away from being able to replace OpenAI technology with Microsoft's own technology.
--:-- Sebastian Herrera: Microsoft has really big ambitions. They talk a very big sort of game, but they're not necessarily matching it yet.
--:-- Alex Osula: That was WSJ reporter Sebastian Herrera. Thanks so much, Sebastian. Thank you.
--:-- Alex Osula: Shipments of Nixperia microchips are leaving China again, easing a shortage of simple but ubiquitous parts that threaten to paralyze the auto industry.
--:-- Alex Osula: Beijing had stopped exports of Nixperia chips after the Dutch government seized the company from its Chinese owner.
--:-- Alex Osula: The diplomatic turning point on the chips came after last week's meeting between President Trump and Chinese leader Xi Jinping.
--:-- Alex Osula: And Wendy's said it would close hundreds of its roughly 6,000 U.S. restaurants. The company also said low-income consumers in particular are facing challenges right now.
--:-- Alex Osula: In the restaurant industry, some chains have reported consumers are cutting spending, making fewer trips, and smaller purchases.
--:-- Alex Osula: And that's What's News for this week.
--:-- Alex Osula: Tomorrow you can look out for our weekly markets wrap-up, What's News in Markets? Then on Sunday, we'll be featuring an episode of our sister podcast, WSJ's Take on the Week.
--:-- Alex Osula: That digs into one of the biggest business stories at the moment, Paramount Skydance's pursuit of Warner Brothers' discovery.
--:-- Alex Osula: That's in What's New Sunday. And we'll be back with our regular show on Monday morning.
--:-- Alex Osula: Today's show is produced by Pierre Bien-Aimé and Zoe Kolkin, with supervising producer Tali Arbel.
--:-- Alex Osula: Michael LaValle wrote our theme music.
--:-- Alex Osula: Jessica Fenton is our technical manager.
--:-- Alex Osula: Aisha El-Muslim is our development producer.
--:-- Alex Osula: Chris Zinsley is our deputy editor.
--:-- Alex Osula: And Philana Patterson is the Wall Street Journal's head of news audio.
--:-- Alex Osula: I'm Alex Osula. Thanks for listening. We'll see you next time.
--:-- Alex Osula: Waterproof micellar water now.
