--:-- Alex Osilev: Why do over 50% of the Fortune 500 use Elastic? Because of Search AI. Search AI is what's the next chatting one-on-one with your business. It's also LG CNS turning real-time context into real smart cities. Find out what Elastic can do for your business at elastic.co slash search AI.
--:-- Alex Osilev: The Supreme Court hears a case that will decide the future of President Trump's tariffs. The vehicle is imposition of taxes on Americans, and that has always been the core power of Congress. Plus, the president's response to Democrat election victories and the filibuster. And France moves to suspend Shein's website after discovering childlike sex dolls for sale on its platform. It's Wednesday, November 5th. I'm Alex Osilev 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 Osilev: In a breaking news update, the Federal Aviation Administration says it's ordering airline traffic to be reduced by 10 percent in 40 locations while air traffic controllers work without pay during the government shutdown. See more at WSJ.com.
--:-- Alex Osilev: The U.S. Supreme Court this morning heard arguments on one of the most consequential economic and political cases to come before it in decades. The nine justices are weighing whether the president's sweeping global tariffs under the International Emergency Economic Powers Act without congressional approval are lawful, as well as tariffs on Canada, China, and Mexico related to fentanyl.
--:-- Alex Osilev: The challengers, a group of small businesses and states, say he exceeded his legal powers. Lower courts have agreed, and now it's up to the Supreme Court to decide the fate of a cornerstone of the president's agenda.
--:-- Chief Justice John Roberts: The vehicle is imposition of taxes on Americans, and that has always been the core power of Congress. So to have the president's foreign affairs power trump that basic power for Congress seems to me to kind of at least neutralize between the two powers, the executive power and the legislative power.
--:-- Alex Osilev: WSJ Supreme Court correspondent Jess Bravin told us more about the justices' responses.
--:-- Jess Bravin: Today's argument really seemed like a route for the Trump administration. From the chief justice to the newest justice, Justice Jackson, we saw a lot of skepticism about the basic claim that the president can impose these worldwide tariffs because this emergency economic law from the 70s allows him to regulate foreign financial transactions in an emergency.
--:-- Jess Bravin: The justices just didn't buy the idea that that word carries in it the power to impose tariffs because tariffs are a tax. They're a tax paid by Americans to buy products that are imported from overseas. Taxes are the basic power that Congress has. Remember taxation without representation way back when in 1776
--:-- Jess Bravin: Most of the justices were very skeptical of the Trump administration position. Some though of course did have serious questions for the challengers. The most notable was Justice Samuel Alito who kept trying to raise various hypotheticals and various arguments that might be used to justify the Trump administration's position. But even he was skeptical of some of the administration's claims.
--:-- Alex Osilev: Trump has called the case, quote, literally life or death for our country. A decision upholding President Trump's authority would legitimize the use of tariffs as a cudgel to resolve trade and non-economic disputes alike and could give the president broad authority to regulate the U.S. economy without the involvement of Congress in any circumstance where he finds an emergency exists.
--:-- Alex Osilev: But if the court overturns the tariffs, the Trump administration has warned it will need to repay tens of billions of dollars it has already collected. It would also undercut a core legal justification for a large chunk of Trump's tariffs and potentially remove leverage in trade talks.
--:-- Alex Osilev: In a positive sign for the labor market, the payroll processing company ADP said today that American businesses added 42,000 jobs in October after two months of declines. Data from private sources like ADP have become more important as the government shutdown disrupts the usual stream of economic data releases.
--:-- Alex Osilev: And U.S. markets rebounded today after yesterday's sell-off. The three major indexes each rose less than 1%, with the Nasdaq leading the gains.
--:-- Alex Osilev: We're exclusively reporting that OpenAI says it's not working towards an IPO, for now. Speaking at the Wall Street Journal's Tech Live conference, OpenAI CFO Sarah Fryer said the AI giant's conversion to a new structure does not mean an IPO is imminent, and that OpenAI is prioritizing growth and research and development over profitability.
--:-- Alex Osilev: We are continuing to get the company into a state of, like, constantly stepping up to the scale that we're at. So I don't want to get wrapped around an IPO axis hole.
--:-- Alex Osilev: The Wall Street Journal has reported that the company has discussed a public listing as soon as 2027. Fryer says the ChatGPT maker is on pace to generate $13 billion in revenue this year, and that OpenAI is trying to find new ways to grow sales.
--:-- Alex Osilev: News Corp, owner of the Wall Street Journal, has a content licensing partnership with OpenAI. And in another exclusive, the Motion Picture Association, which has administered the parental guidance ratings for films for more than 50 years, is asking Meta platforms to stop using the term PG-13 for its content restriction system for teens on Instagram.
--:-- Alex Osilev: A lawyer for the movie industry trade group sent Meta a cease and desist letter, saying Meta's assertions that content on Instagram's teen accounts would be guided by PG-13 ratings are, quote, literally false and highly misleading.
--:-- Alex Osilev: Meta says it never claimed or implied that its teen accounts were officially PG-13 rated or certified by the Motion Picture Association.
--:-- Alex Osilev: Coming up, how President Trump is responding to Democrats' electoral victories. That's after the break.
--:-- Alex Osilev: Why do over 50% of the Fortune 500 use Elastic? Because of Search AI. Search AI is what's next chatting one-on-one with your business. It also LG CNS turning real context into real smart cities. Find out what Elastic can do for your business at elastic slash search AI
--:-- Alex Osilev: As you heard from us this morning, Republicans suffered losses in key races in New York, New Jersey, and Virginia during yesterday's election, a sign of voter dissatisfaction with the economy and a crack in the coalition that elected President Trump.
--:-- Alex Osilev: The president's response today, once again urging Republican senators to dump the filibuster. At a breakfast with GOP senators at the White House this morning, the president said lowering that 60-vote threshold for passing most bills would let Republicans rack up policy victories and boost its political prospects before next year's midterm elections.
--:-- Alex Osilev: The president also says terminating the filibuster is the only way to end the 36-day government shutdown that is now the longest in history. He says the shutdown is a, quote, big factor in the GOP's losses.
--:-- Alex Osilev: Journal reporter Meredith McGraw joins me now to discuss.
--:-- Meredith McGraw: Well, this morning at the White House, President Trump seemed pretty reflective on the results of last night's election. He said if you look at what the pollsters said, the shutdown played a role, but also the fact that he wasn't at the top of the ticket was actually a drag on Republican candidates.
--:-- Meredith McGraw: And he also said that they really didn't expect there to be a lot of Republican victories last night because these races were mostly in Democrat areas.
--:-- Alex Osilev: One big winner from last night was Zoran Mamdani, who will become the next mayor of New York City. In a press conference today, Mamdani announced a transition team, which includes former Federal Trade Commission chair Lina Khan.
--:-- Meredith McGraw: He says his administration will address affordability as well as threats from the Trump administration.
--:-- Meredith McGraw: New Yorkers are facing twin crises in this moment, an authoritarian administration and an affordability crisis. And it'll be my job to deliver on both.
--:-- Meredith McGraw: It'll be my job to stand up for the city and also to ensure that we do not look at Washington, D.C. as if it is the reason for all of the problems right here in New York City.
--:-- Alex Osilev: So, Meredith, in the lead up to the mayoral election, Trump threatened to withhold billions in federal funds if Mamdani won. What is he saying now?
--:-- Meredith McGraw: I was talking to a White House official this morning about the election postmortem, and I think they're really going to be framing Mamdani as the face of the Democratic Party and forcing more moderate Democrats to have to answer to whatever Mamdani's policies are in New York.
--:-- Meredith McGraw: And yet the day after this election, Trump is pushing Republican senators to end the filibuster. Why is that?
--:-- Meredith McGraw: Well, President Trump has long made the case that he thinks Republicans should end the filibuster. He thinks that if they get rid of the filibuster, not only would they be able to reopen the government, but they could very quickly enact some of the things that have been on his legislative wish list, things like voter ID.
--:-- Meredith McGraw: And he claimed that they would be able to potentially fare better in the midterms because they'd be able to show voters what they were able to accomplish in Congress.
--:-- Alex Osilev: Is there indication that more Republicans are on board?
--:-- Meredith McGraw: Republican leadership has so far resisted any calls to terminate the filibuster. Senator John Thune has been pretty clear on that from the start and has said that he doesn't think the Republicans have the votes right now for that.
--:-- Alex Osilev: Have the election results pushed the ball forward on the bipartisan negotiations in Congress to end the shutdown?
--:-- Meredith McGraw: The expectation was that after Tuesday night, Democrats might put up some wins. Republicans felt that maybe they'd have some sort of opening to get them to agree on something on the Hill. But right now, it does seem like they remain in the same sort of limbo that we've been in now for weeks.
--:-- Alex Osilev: That was WSJ White House reporter Meredith McGraw. Thanks so much, Meredith.
--:-- Meredith McGraw: Thank you.
--:-- Alex Osilev: We have an update on the UPS cargo plane that crashed yesterday in Louisville, Kentucky, killing at least 11 people. National Transportation Safety Board officials said today that an engine detached from the plane's left wing shortly after takeoff and fell on the airfield.
--:-- Alex Osilev: Local officials say several people were injured and taken to hospitals, and Kentucky Governor Andy Beshear says he expects the death toll to rise.
--:-- Alex Osilev: UPS hasn't confirmed any casualties or injuries of the three-person crew on its aircraft. UPS's main air cargo hub is in Louisville, where it processes millions of packages daily.
--:-- Alex Osilev: McDonald's says its push into value meals is paying off at a time when more customers are feeling economic pressure. The burger chain says its U.S. same-store sales grew by 2.4 percent in its most recent quarter, beating analyst expectations.
--:-- Alex Osilev: The company is trying to win back cost-conscious consumers and says the growth came after it increased spending on value meals, new products, and marketing.
--:-- Alex Osilev: And the French government is moving to suspend Shein's website after authorities discovered that sex dolls resembling children and weapons were being sold on the Chinese-founded e-commerce company's platform.
--:-- Alex Osilev: The French finance ministry says it's giving the company 48 hours to demonstrate it has scrubbed its platform of illegal products. The interior ministry has separately asked a court to shut down the website.
--:-- Alex Osilev: A Shein representative says the company has temporarily suspended sales from third-party vendors on its marketplace in France. and is, quote, seeking dialogue with French authorities.
--:-- Alex Osilev: Shein today also opened its first-ever permanent physical store in Paris, attracting both customers and protesters.
--:-- Alex Osilev: And that's what's news for this Wednesday afternoon. Today's show is produced by Pierre Bien-Aimé with supervising producer Tali Arbel. I'm Alex Osilev for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening. We'll see you next time.
