WSJ What’s News - A Drone Mystery on the East Coast

Episode Date: December 16, 2024

 A.M. Edition for Dec. 16. The U.S. government is sending a drone-detection system to New York to help investigate a recent surge in drone sightings, even as federal agencies say there's no evidence national security is at risk. Plus, Apple plans to release thinner and foldable iPhones in a bid to revive sagging sales growth. And WSJ reporter Rebecca Picciotto explains how real-estate investment trusts are betting billions on rental homes as ownership slips out of reach for many Americans. Luke Vargas hosts.  Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

This podcast is brought to you by CME Group, the world's leading derivatives marketplace, offering the widest range of global benchmark products across all major asset classes. CME Group, where risk meets opportunity. Politicians push for more resources to investigate mysterious drone sightings over the East Coast. Plus, Apple plans foldable iPhones to revive sagging growth, and Wall Street bets billions on rental home development. More millennials are aging into their prime home buying years. They're starting families and looking to move into these coveted suburban neighborhoods near good schools.

Some are renting by choice, but more and more are having to sort of rent by force. It's Monday, December 16th. I'm Luke Vargas for the Wall Street Journal and here is the AM edition of What's News, the top headlines and business stories moving your world today. The U.S. government is sending a drone detection system to New York to assist state and federal law enforcement in investigating a recent surge in drone sightings. That's according to New York Governor Kathy Hochul, who joined a list of other lawmakers, in calling on the Biden administration to do more to look into the drone activity over

parts of the East Coast, which briefly shut down an airport north of New York City on Friday and has sparked public concern. In a joint statement, the FBI and Department of Homeland Security said there's no evidence of a national security or public safety threat stemming from the drones and that many reported sightings were in fact manned aircraft. However, New York Senator Chuck Schumer pushed back on that assessment yesterday. Here he was courtesy of WNYW Fox 5 NY. It's not a bird, it's not a plane, it's a drone. And when it comes to drones, people in the New York area and all across the country have more questions than answers. Schumer said he plans to co-sponsor legislation that would give state and local police departments

the legal authority to detect, monitor, and track drones. South Korea's legislature has impeached President Yoon Seok-yul over his brief imposition of martial law earlier this month. Yoon was immediately stripped of his powers as a result of Saturday's vote, but Journal's Seoul Bureau Chief Timothy Martin says it could be months until South Korea's Constitutional Court reviews and certifies the impeachment

and before a snap election can be called. In the interim, Prime Minister Han Deok-soo is running the country. He is a Harvard-educated, former U.S. ambassador, career civil servant, and he takes reins of South Korea at a very sensitive time. The country's most important ally, the U.S., is going through its own administration change. Things could change quickly between U.S. and South Korea, whether it's on trade, whether it's North Korea policy, or something else.

And it's not clear what his political mandate is. If the US or other foreign countries, North Korea, for South Korea's hand, what direction might this interim president go? And will that have the backing of the public? We report that Apple is planning to release foldable iPhones after years of sticking to smaller design changes to its lineup. According to people familiar with the company's plans, Apple will also launch an iPhone that's thinner than the 8mm profile of its current models starting next year. The model is intended to be cheaper than pro models with a simplified camera system to reduce costs.

Apple is pushing for a 2026 release of a foldable iPhone that would have a display size larger than its 16 Pro Max model and also has plans for an even bigger device that unfolds to about 19 inches. iPhone sales account for around half of Apple's overall revenue. However, it's lately seen sales slump with fiscal 2024 revenue growing less than 1%. We are exclusively reporting that WHP Global, the owner of Bonobos and Toys R Us, is nearing a deal to buy wedding dress brand Vera Wang. According to people familiar with the matter, the deal is expected to be announced this morning. The exact terms being discussed couldn't be learned, but sources say that the designer

label brings in more than $700 million in annual retail sales. Chinese stocks have end of the day lower after a batch of economic data released today indicated that Beijing's efforts to boost growth are struggling to gain traction. Retail sales growth slowed sharply last month, while investment in buildings, equipment, and other fixed assets also decelerated. And in other markets news, Bitcoin is extending a weekend rally trading at around $104,000. And later this week, investors will turn their attention to the Federal Reserve's interest rate decision, where a quarter percentage point rate cut appears all but guaranteed. Coming up with ownership slipping out of reach for many young families, Wall Street bets

on building new rental homes in coveted suburban neighborhoods. Plus, a new way to protect yourself from parcel theft. Those stories after the break. Amazon Q Business is the new generative AI assistant from AWS. Because many tasks can make business slow, as if wading through mud. Uh, help? Luckily, there's a faster, easier, less messy choice. Amazon Q can securely understand your business data and use that knowledge to streamline tasks. Wall Street has a new favorite bet in American real estate, rental homes.

And for more on how that's taking shape, what it tells us about the state of the U.S. housing market, and potentially what it could mean for you, I'm joined by Journal reporter Rebecca Pichotto, who's making her first appearance on What's News Today. Hey Rebecca. Hey, how's it going? It's going great. We're really happy to have you on. And let's talk about the news of this news.

You report we've been seeing a number of recent purchases by real estate investment trusts lately, kind of speaking to one particular trend. What's happening? Yeah. So more and more big Wall Street real estate firms like Avalon Bay Communities, Blackstone, they're pouring money into developing these build to rent neighborhoods, which are basically clusters of single family homes that have communal pools and fitness centers and other amenities. They look like any other sort of upscale suburban neighborhood, except the residents don't own

their homes. The developers built them solely to lease them out to renters. So we're seeing billions poured into this growing subsector, especially in the Sunbelt region, stretching from the Carolinas to Southern California. Suburban homes, primarily? Yeah, it's single family homes. So it's not your typical sort of tall apartment building in a densely populated city.

These are built for the renter who wants more space in a suburban neighborhood, but doesn't see the economic benefit of buying in such a hot housing market. Rebecca, this is a pivot, right, from where some of these same investors were putting their money into real estate before, to some extent, right? Yeah, it's still early stages of this development trend, but from 2021 to 2023, the share of built-to-rent housing construction starts

doubled to 10%. That's a statistic from the National Association of Realtors. So it's certainly a broader shift in this direction, not just sort of a couple of firms investing. And to get at a trend like that, you would imagine these companies are following market forces. There are upsides to renting, as some folks you spoke to in this article pointed out, and yet there is a growing segment of the US population that really can't buy it.

It isn't a choice. Right. So more millennials are aging into their prime home buying years. They're starting families and they're looking to move into these coveted suburban neighborhoods near good schools. And as you said, some are renting by choice, they prefer the flexibility and the convenience of it, but more and more are having to sort of rent by force. In the wake of the pandemic, home prices are near record highs. The average monthly mortgage rate this year became more expensive than the average apartment rent. So couple that with the shortage of inventory and the buying market has just become so competitive

for the average home buyer that oftentimes they just find themselves priced out. You mentioned the shortage of inventory. I wonder then what the longer term outlook here is these build to rent homes in good areas, good schools that sounds pricey, especially throwing all the amenities you talked about. And if people can't afford to buy now, it's going to take a lot of effort for them to save up. So that might be an option in the future. Will it not? Sure. Avalon Bay's chief investment officer, their argument is that this isn't really a zero sum game. Given how there's a chronic shortage of housing across the market and that's pushing prices

up, he sees building any kind of new supply and putting that on the market, whether it's built to rent or built to sell, he sees that as a good thing and he doesn't think it comes at the expense of for sale inventory. That said, there are some concerns that if more developers are putting their attention and their money into building rental homes, some economists think that could shift their attention away from building for sale homes where there still is a need for more supply in order to normalize prices and ultimately make it more affordable for home buyers. So Moody's director of economic research observed that in regions like the Sunbelt where built

to rent is taking off, there has been a diversion of supply from the for sale market into this new potential asset class. And so there's certainly attention here. Rebecca Pichotto writes about the residential rental market and housing policy for the Wall Street Journal. Rebecca, pleasure to have you on the program. Thanks so much for the update. Thanks so much for having me.

And finally, if you're worried about your online shopping deliveries disappearing from your front porch in the homestretch before Christmas, you're far from alone. According to personal finance site Value Penguin, nearly half of online shoppers can expect to have at least one parcel fall victim to so-called porch pirates this holiday season. To fight back, journal reporter Imani Moise told the Your Money Briefing podcast that some Americans are shelling out for high-tech video doorbells or expensive lock boxes and are even springing for a new type of insurance. Porchpals is a membership service. For $120 a year, they let their customers file up to three claims a year for a total value of $2,000. And you link your credit or debit card and

any purchase delivery that is made with that credit or debit card is covered. So if you tell Pouch Pals, hey, I never got this package, it was stolen, here's the footage, you don't even have to submit that footage, they'll replace your item. The financial advisors that I spoke to said you kind of have to be smart. So if you get a $40 sweater, swiped, maybe you don't file that claim. But if it's an iPhone or a laptop, that could be a good use of a claim. And that's it for What's News for Monday morning. Today's show was produced by Daniel Bach with supervising producer Christina Rocca and I'm Luke Vargas for The Wall Street Journal.

We will be back tonight with a new show. Until then, check in on those packages and thanks for listening.