WSJ What’s News - Evan Gershkovich Back on U.S. Soil After Historic Prisoner Swap

Episode Date: August 2, 2024

A.M. Edition for August 2. Wall Street Journal reporter Evan Gershkovich and two other U.S. citizens reunite with their families after the most complex prisoner swap with Russia since the Cold War. Plus, WSJ columnist Dan Gallagher unpacks a bumper week of tech earnings. And, the U.S. recognizes Edmundo González as the winner of Venezuela’s disputed presidential election, diailing up pressure on strongman President Nicolás Maduro to step down. Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Introducing TD Insurance for Business with customized coverage options for your business. Because at TD Insurance, we understand that your business is unique, so your business insurance should be too. Contact a licensed TD Insurance advisor to learn more. He's free. We've got the latest as the journals Evan Gershkovich and other prisoners held by Russia are welcome back to U.S. soil. You know what I said? Alliance is making a difference. They stepped up, they took a chance for us.

It mattered a lot. Plus a look back at a mixed week of tech earnings and at broader market jitters heading into today's U.S. jobs report. It's Friday, August 2nd. 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. Journal reporter Evan Gershkovich has been reunited with his family after arriving back in the U.S. overnight.

Gershkovich earlier in the day had been handed over to U.S. authorities in Turkey after being jailed in Russia for more than a year on a false charge of espionage. Gershkovich has just landed now in Texas, where he'll be evaluated medically and psychologically at an Army medical center before beginning his reintegration process. Among those freed along with Evan were former Marine Paul Whelan, journalist Alsuk Herma-Shava, and Vladimir Karamurza, a twice-poisoned British-Russian dissident who had this to say on a phone call with President Biden after his release. No one is strong enough for this. I was sure I'm going to die in a phone call with President Biden after his release.

No word is strong enough for this. I was sure I'm going to die in prison. I don't believe what's happening. I still think I'm sleeping in my prison cell in Omsk instead of hearing your voice. Kara Merza was one of several political prisoners freed yesterday, a fact that journal Berlin bureau chief Bertrand Benoit said German Chancellor Olaf Schulz has invoked to defend handing over convicted murderer Vadim Krasikov to Moscow, which proved to be a lynchpin of yesterday's multi-country prisoner swap.

The argument that he made was that Germany weighed this against its obligations to the US as an ally, and against the humanitarian necessities of getting these people out of Russia as soon as possible. And on balance, the reactions were mainly positive. Everybody's very happy to see people like Evan back home, to see a number of Germans also come back home and to see a number of very prominent Russian dissidents being freed from prison and coming to Germany. And so that is almost universally seen as a success, while people also noted the heavy price that Germany was paying in this deal.

We will have much more on the precedent set by this historic prisoner swap on our Sunday episode of What's News. But for now, as our editor-in-chief Emma Tucker said last night, we're grateful to have our colleague back and inspired by him to continue our work. There's a lot we don't know about what Evan put up with when he was in prison. But it's clear from what we saw of him, he handled it incredibly well. We have him back. He will tell his story. It's a chance for us to make the point that journalism matters. It's dangerous.

It's hard work. But we will never ever, the journalists, step away from the commitment we have to tackling difficult stories in difficult areas, so long as it doesn't put our journalists to greater risk. The U.S. has recognized the opponent to Venezuelan President Nicolas Maduro as the winner of the country's disputed presidential election. In a statement last night, Secretary of State Antony Blinken said there was overwhelming evidence that Edmundo Gonzalez had won the most votes in last weekend's poll, escalating calls

for Maduro to step aside. Blinken, however, stopped short of calling Gonzalez a president-elect, a move that leaves open the possibility for Washington to further dial up the pressure. A growing number of foreign governments have also urged Maduro to recognize his apparent defeat. And a judge has thrown out an antitrust verdict against the NFL that awarded $4.7 billion in damages to customers of its Sunday Ticket Out-of-Market TV package, with a judge saying expert witness testimony provided by the plaintiffs used quote flawed methodologies and that the

jury's damages weren't based on evidence. The ruling adds yet another plot twist to a nearly 10-year-old legal battle over whether the package violates antitrust law and harms consumers. A lawyer for the plaintiffs didn't immediately respond to a request for comment on whether they would appeal. Coming up, we'll look back at this week's big tech earnings, which columnist Dan Gallagher says show its Nvidia's market and that everyone else is just living in it. That and more after the break.

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everyone else races to embrace artificial intelligence. Dan, we aren't going to get NVIDIA's results for several weeks still, but what did you see in this week's earnings that pointed to the chip maker again kind of being the one in the driver's seat here? The big focus for investors in this round of reports for all these companies was how much are these guys spending on capital expenditures to build up AI capabilities and services. And that spending disproportionately benefits Nvidia because they have the best systems and processors for processing AI, much bigger than anybody else in the game, have a way longer lead time in it. So what we saw in these reports is that all these companies are

really boosting at CapEx, those capital expenditures, Microsoft and Google and Meta and Amazon. Together, just in the June quarter, they spent a little over $58 billion in CapEx. And that was up 64% from the same period last year. And that's the biggest jump these companies have seen on a combined basis since 2018. And guess who that's great for? That's great for Nvidia. Great for Nvidia, but not every chip maker really is feeling the good times, are they? I mean, we saw Intel shares, for instance,

Nosedive in off hours trading. The company posted a loss for the second quarter yesterday. Quite a stark contrast with what's going on at Nvidia. For sure, I mean, Intel was the dominant chip maker years ago. But as these giant tech companies have been building up more AI capabilities, they're buying the types of chips Nvidia sells and buying way less of the server-type chips that Intel sells. And that has been awful for Intel. In addition to challenges in the PC market, the fact that Intel is trying to catch up their manufacturing process with TSMC

while defending market share, these things have culminated into essentially a bad situation for them. And on top of that, they've just taken one of the big sweeteners for their investors out of the picture. They have, they had to preserve cash. They've suspended their dividend. They've paid a dividend since 1992. I mean, they're one of the Silicon Valley stalwarts and for investors, this is a major deal because this kind of is a, is a reason to buy the stock if other parts

of the business aren't doing well. So they're feeling it. And that is another component of the story of Nvidia kind of taking so much of this AI game for itself so far. And just turning back to those four companies that are spending big on AI, Meta, Amazon, Microsoft and Google, all of them saw their revenue growth slow from the March quarter, which sort of raises the question of from an investor perspective, how long will people be okay with two key indicators kind of going in opposite directions, spending going up and revenue heading down?

That's the conundrum investors face here. That question is really at the forefront this quarter because we did see core business decelerate to many areas, like YouTube ads disappointed. Amazon had several business segments that came in below Wall Street's expectations. So now we're talking the direct retail sales of the stuff they sell, the third party sellers, advertising. Advertising is a really big deal for Amazon. That's now more than $50 billion a year in revenue. And a company like Amazon that's dealing with consumer spending, feeling pressure right

now, these are all business trends that affect all these companies in a big way. And they're making plenty of money. They're not necessarily hurting, but you're seeing core trends slow, while a lot of money is going out the door on this kind of future promise of generative AI. And I think that's what investors are thinking, okay, how long does this go on? Nat. And I think that's what investors are thinking. Okay, how long does this go on taking a slightly different approach than those four companies? Dan is Apple spending considerably less so far at least on its AI efforts But sort of banking in some ways more on consumers being the ones to pay for the big purchase that matters for Apple

Of course an expensive new iPhone on the basis of the company's future AI offerings. A lot riding on that, even if investors maybe are less worried about their capital expenditures, is that right? Yeah, Apple is in kind of a different boat. They're in the business of selling hardware, selling phones. And so Apple has had three straight years of relatively weak iPhone cycles. So they really need a good cycle to get investors excited again. And as the years have gone on, you think about what are the things that get you to spring for a purchase of a new phone.

This year, they're going to be looking for AI to really do that, to get people to make that purchase and upgrade. And right now, it's a big if whether people will do that. I have been speaking to Wall Street Journal, Hurt on the Street tech columnist, Dan Gallagher. Dan, thanks for staying up for us. Pleasure. And in other news moving markets today, U.S. stock futures are selling off after weakening employment, manufacturing and construction data yesterday raised fresh questions about the health of the world's largest economy.

And while monthly U.S. jobs reports are often a big deal, this month's release, coming at 8.30 a.m. Eastern, could take on outsized significance amid growing concerns about cooling in the labor market. Economists, pulled by the journal, are expecting some 185,000 jobs were added in July, down from 206,000 added a month earlier. While also feeling the effects of a cooling U.S US economy is Japan's Nikkei stock average, which is also contending with an interest rate increase by the Bank of Japan, the index fell by nearly 6% today, its largest single drop in more than four years, with companies

involved in semiconductor production particularly hard hit. And back in the US, we are awaiting earnings from Chevron and ExxonMobil as the energy giants contend with falling natural gas prices and narrowing margins for making fuel. And finally, swimming has been one of the hottest tickets at the Paris Olympics so far. Team USA athlete Katie Ledecky made history yesterday by scooping up a record 13th career medal, while French sensation Léon Marchand has racked up three gold medals so far this Olympics and Canada's Summer Macintosh has twice struck gold. And while there have been a handful of Olympic records set along the way, there are questions

about whether there's something holding the athletes back from smashing world records. Journal sports reporter Lane Higgins explained to us why the Paris Olympic Pool, which is three feet shallower than in past games, could be part of the problem. — It has to do with how fast waves dissipate and whether they rebound and hit the swimmers while they're going, which just makes a more turbulent environment for them to swim in. Some of the swimmers have sort of been surprised when they finish, they think they've gone really fast and they look up at the scoreboard and they found out that their time is actually much slower. Some of these athletes, the reason they're bummed

is because they're such heavy gold medal favorites that they're setting their goals kind of one step beyond that. The feeling is yes, the medals matter, but the most fundamental part of swimming is, can I get faster than I've ever gone before? That's what it is when you're five, that's what it is when you're at the Olympics.

S. W. Swimming events will run until Sunday evening in Paris. And as swimming winds down, athletics will kick into high gear, starting today with the men's decathlon. And that's it for What's News for Friday morning. Today's show was produced by Daniel Bach and Kate Bullivant with supervising producer Christina Rocca and I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Otherwise, have a great weekend and thanks for listening.