--:-- Alex Osola: What's driving the markets this week? What's on investors' minds as they look ahead? Find out in 10 minutes or less on The Markets Podcast from Goldman Sachs. Listen now.
--:-- Alex Osola: With no deal in sight, the government heads towards a shutdown. Plus, what Pfizer gets out of offering its drugs to Americans at a reduced rate?
--:-- Alex Osola: So in exchange for continuing to invest in domestic manufacturing and making these other concessions, it won't be subject to what are called 232 tariffs. That'll be great for Pfizer, which has quite a large manufacturing footprint outside the United States.
--:-- Alex Osola: And CoreWeave secures a $14 billion contract with Meta. It's Tuesday, September 30th. 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: The federal government appears to be mere hours away from a shutdown. Funding will lapse just after midnight tonight unless Congress passes a stopgap spending bill, which is an increasingly remote possibility.
--:-- Alex Osola: Speaking to reporters, President Trump said a shutdown was likely. He said he could use a lapse in funding to flex his executive powers at Democrats' expense while also signaling he could be open for more discussions regarding their health care demands.
--:-- Alex Osola: With just hours to go, Democrats leaned on Trump to rally Republicans behind some sort of deal. More votes were planned in the Senate today, but there was no sign of a late reprieve.
--:-- Alex Osola: For more about the impact of a potential shutdown, I'm joined by WSJ economics reporter Justin Layhart.
--:-- Justin Layhart: Government workers themselves, I think, are the primary ones feeling the consequences. But how many of them would be furloughed as a result of the shutdown? People think upwards of 800,000 workers would be furloughed, so they wouldn't be working.
--:-- Justin Layhart: The last shutdown was at the end of 2018 into 2019. Congress at that time had passed a variety of spending bills already. So it was a partial shutdown, something around 350,000 workers got furloughed in that one.
--:-- Justin Layhart: The previous shutdown to that was in 2013, and that was about 800,000 as well.
--:-- Justin Layhart: As we mentioned on this morning's show, a shutdown means the Bureau of Labor Statistics won't release or collect any economic data, which includes this Friday's jobs report.
--:-- Justin Layhart: What are the implications of having that not come out? If you think of policymakers like at the Federal Reserve, investors, businesses, regular Americans, when we have less economic data or we don't get to see economic data, we're flying blind a little bit.
--:-- Justin Layhart: If this was a prolonged shutdown, the Fed would be getting inflation data either. It's hard for them to make a decision about rates, for example.
--:-- Justin Layhart: We don't often think of the private sector as being affected by a government shutdown, but it is, right?
--:-- Justin Layhart: Oh, yeah. There's a lot of government contract work that goes on, so those folks won't be getting paid. Or then you just think about some other things, like the coffee shop federal employees go to. They're not sending as much coffee.
--:-- Justin Layhart: People who have businesses set up around national parks, well, national parks are closed, so you don't have that going on.
--:-- Justin Layhart: What does a government shutdown mean more broadly for economic growth? When the government shuts down, it does shave some growth off. GDP does not grow as quickly.
--:-- Justin Layhart: Now, what happens after the shutdown is that there is a rebound. But there is some business that is lost forever. We end up with a somewhat smaller economy than we would have had.
--:-- Alex Osola: That was WSJ economics reporter Justin Layhart. Thank you, Justin.
--:-- Alex Osola: A rally in pharmaceutical stocks helped lift major indexes today, overcoming worries about a government shutdown and new data pointing to a decline in consumer confidence.
--:-- Alex Osola: The Dow rose about 0.2 percent, the Nasdaq added 0.3 percent, and the S&P 500 was up roughly 0.4 percent.
--:-- Alex Osola: Texas Stock Exchange, the Dallas-based listing venue taking aim at New York's dominance, is one step closer to being open for business.
--:-- Alex Osola: Today, the Securities and Exchange Commission approved Texi to operate as an exchange, paving the way for Texi to start listing shares next year.
--:-- Alex Osola: And ExxonMobil announced today that it is slashing 2,000 jobs worldwide.
--:-- Alex Osola: According to a person familiar with the matter, none of those job cuts are in the U.S. Almost half are in Canada at Imperial Oil, majority owned by Exxon.
--:-- Alex Osola: The affiliate plans to reduce its workforce by 20% by the end of 2027.
--:-- Alex Osola: As we mentioned on this morning's show, today, Defense Secretary Pete Hegseth addressed hundreds of top military officers at an extraordinary meeting at the Marine Corps base in Quantico, Virginia.
--:-- Alex Osola: WSJ National Security Correspondent Michael Gordon joins me now from Washington.
--:-- Michael Gordon: It was kind of a rah-rah speech where Secretary Hegseth talked about how he wanted to strengthen standards, largely for physical fitness.
--:-- Michael Gordon: Within the military, even if it means that women would be excluded from combat roles, and he railed against diversity and inclusion, which had been familiar targets for him.
--:-- Michael Gordon: One thing that was different was President Trump attended the meeting, which wasn't part of the original plan, and he gave a very striking speech about using the military potentially in American cities to quell disorder.
--:-- Michael Gordon: What were the reactions from the military personnel who were there? Were they surprised by any of this?
--:-- Michael Gordon: I think the military was pretty stoical throughout. They're trained to be apolitical.
--:-- Michael Gordon: I know people who were in the room at the time, and I've spoken with them. And the ones that conveyed to me, there was occasionally some nervous laughter.
--:-- Michael Gordon: I think the attacks on President Biden and President Trump's speech, I think that the military is not comfortable with that.
--:-- Michael Gordon: They're not really tuned to hear speeches in which one political leader assails another.
--:-- Michael Gordon: Did Trump or Hegseth signal or announce any strategic shifts in how the U military operates?
--:-- Michael Gordon: Two things have happened that the administration has been very direct and open about but which are controversial within military circles, within the Congress.
--:-- Michael Gordon: One is the increasing use of the National Guard and even active duty military in American cities.
--:-- Michael Gordon: And the other one is the role of the military in the Caribbean, including against drug boats.
--:-- Michael Gordon: This emphasis on operations in the Caribbean, partly directed at intimidating Venezuela and partly directed at drug traffickers, is a new thing.
--:-- Michael Gordon: There's a new national defense strategy, which is expected to emphasize Western Hemisphere defense while still taking note of the challenge from China.
--:-- Alex Osola: That was WSJ National Security Correspondent Michael Gordon. Thank you, Michael.
--:-- Alex Osola: Coming up, what we know about the government's new direct-to-consumer site for buying medicine. That's after the break.
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--:-- Alex Osola: Today, there's a big change for the autos industry. The $7,500 tax credit that buyers would get for purchasing a new electric vehicle has expired.
--:-- Alex Osola: Last month, EV sales were a bright spot in auto sales numbers, with Toyota, Hyundai, and Kia reporting double-digit increases in August from a year earlier, as consumers raced to take advantage of the credit.
--:-- Alex Osola: So what does it mean for these companies now that the credit is gone?
--:-- Alex Osola: John Murphy, Managing Director of Strategic Advisory at Hague Partners, told our Take on the Week podcast where the auto industry goes from here.
--:-- John Murphy: It's a very big deal in many ways. First and foremost, when we look at EV penetration, last year it was about 8%.
--:-- John Murphy: First few months of this year, it's ramped up because people were anticipating the end of these EV credits.
--:-- John Murphy: The reality is once that drops off, we're probably going to see something far below 10%, 8%, probably just a few percent.
--:-- John Murphy: Because for a lot of folks in the country, it's a subpar product at a higher price.
--:-- John Murphy: Simply over time, if you can bring the cost of an EV down and ramp up the charging network and create a better product at a better price, I think people will move in that direction.
--:-- John Murphy: But we have not gotten there yet in the auto industry in the United States, and we are probably a very long way off from actually making that work.
--:-- Alex Osola: To hear more, listen to the latest episode of Take on the Week.
--:-- Alex Osola: In other business news, Spotify CEO Daniel Ek said today that he plans to step away from the top job nearly two decades after he founded the music streaming company.
--:-- Alex Osola: Spotify co-CEOs Alex Nordstrom and Gustav Soderstrom will become co-CEOs on January 1st.
--:-- Alex Osola: CoreWeave has secured a contract with Meta worth up to $14.2 billion to provide the social media company with artificial intelligence cloud infrastructure through 2031.
--:-- Alex Osola: The announcement follows multi-billion dollar deals that CoreWeave has recently struck with OpenAI and NVIDIA.
--:-- Alex Osola: And today, OpenAI announced a new social media app for its AI video generator.
--:-- Alex Osola: Users can upload short clips of themselves and insert them into AI-generated worlds, describing the idea, style, and scene they want to see.
--:-- Alex Osola: They can also connect with other users, watch, and comment on their content.
--:-- Alex Osola: With this app, OpenAI is facing off against TikTok, Google's YouTube, and Meta as Silicon Valley ramps up its focus on AI video generation.
--:-- Alex Osola: Today, the White House unveiled a direct-to-consumer website for Americans to buy medication.
--:-- Alex Osola: On the site, dubbed TrumpRx, people would pay cash for certain drugs directly at a discounted price negotiated by the government.
--:-- Alex Osola: Wall Street Journal reporter Liz Esley-White joins me now.
--:-- Liz Esley-White: We don't know a ton about how the site would work. We know that Pfizer is committed to offering some of its drugs on the site.
--:-- Liz Esley-White: And we do know that of the drugs that they are offering, some of those are drugs that are already in their patient assistance program.
--:-- Liz Esley-White: And most Americans actually have private insurance or are on Medicare or Medicaid and so are already getting some discount off the list price of the drug.
--:-- Liz Esley-White: You mentioned Pfizer, which as part of the same announcement at the White House said it would offer some of its drugs at a reduced rate.
--:-- Liz Esley-White: What do we know about Pfizer and its commitment?
--:-- Liz Esley-White: Pfizer is the first company to say we've made a deal with the Trump administration and here are all the different things that we're willing to do.
--:-- Liz Esley-White: One of them is they're going to offer some kind of most favored nation price, which is somehow linked to what other countries pay.
--:-- Liz Esley-White: Those details aren't yet clear either to Medicaid.
--:-- Liz Esley-White: And they're going to offer all new drugs introduced into the United States at this most favored nation price as well.
--:-- Liz Esley-White: But the exact details Pfizer said were confidential.
--:-- Liz Esley-White: Has the company gotten anything from the administration in return?
--:-- Liz Esley-White: The company said that it got a three-year grace period, a reprieve from national security-related tariffs.
--:-- Liz Esley-White: So in exchange for continuing to invest in domestic manufacturing and making these other concessions, it won't be subject to what are called 232 tariffs.
--:-- Liz Esley-White: That'll be great for Pfizer, which has quite a large manufacturing footprint outside the United States.
--:-- Alex Osola: That was WSJ reporter Liz Esley-White. Thank you, Liz.
--:-- Alex Osola: And that's what's news for this Tuesday afternoon.
--:-- Alex Osola: Today's show is produced by Pierre Bien-Aimé and Rodney Davis with supervising producer Jana Heron.
--:-- Alex Osola: I'm Alex Osola for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.
